The United States and Canada reached a last-minute deal on Tuesday to delay President Donald Trump’s planned 50 per cent tariffs on $20 billion worth of Canadian imports, giving the two countries more time to negotiate a broader trade agreement.Trump was set to impose the tariffs from 12.01 am, but announced on social media that he had paused them after the two sides reached what he called a “DEAL”, subject to finalising the documents as Canada and US held last-minute talks.“I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the USA, subject to the finalization of documents, have a DEAL! The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” said Trump on Truth Social.The tariffs would have affected about 5 per cent of Canadian exports to the United States, hitting products ranging from hockey sticks to tongue depressors. Canada had threatened to retaliate, raising the prospect of another escalation between two of the world’s closest trading partners.The latest dispute comes amid already tense US-Canada relations under Trump, who has repeatedly talked about making Canada the 51st US state. The two countries exchanged about $880 billion worth of goods and services last year, while nearly 330,000 people and $2 billion worth of goods cross their shared border every day.Canada is particularly exposed to any trade disruption, with nearly 72 per cent of its goods exports going to the US last year. Washington could also face higher prices if US importers pass tariff costs on to consumers.
What was at stake
Trump had invoked Section 338 of the US Tariff Act of 1930 to impose tariffs of up to 50 per cent on Canadian goods, accusing Ottawa of discriminating against US exports including autos, alcohol and cheese. The provision has never previously been used.Washington has also been seeking greater Canadian purchases of US military equipment, participation in its “Golden Dome” missile defence system and access to critical minerals. Ottawa, meanwhile, wants relief from existing US tariffs on Canadian steel, aluminium and softwood lumber.The negotiations are unfolding alongside talks over the US-Mexico-Canada Agreement, the North American trade pact governing trade between the three countries.
