Trump pauses new 50% tariffs on Canadian goods for three days as Carney says substantial progress has been made.
US President Donald Trump said late on Tuesday that he was pausing new 50% tariffs on Canadian goods for three days, saying the two countries had reached a deal.
The tariffs were due to take effect at midnight.
An hour later, Canadian Prime Minister Mark Carney said substantial progress had been made but more work was needed.
“substantial progress has been made, although there is important work still to be done.”
Trump said in a post on Truth Social that he paused the tariffs “based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL.”
Trump and Carney spoke on Tuesday afternoon. It was their second conversation this week as negotiators continued weeks of talks.
“While we continue this work, Canada remains focused on building a stronger, more independent and more competitive economy at home,” Carney said in his statement
The office of US Trade Representative Jamieson Greer said the agreement would include “comprehensive market access for all American goods, economic security commitments, digital trade alignment,” among other provisions.
In a proclamation posted on the White House website, Trump said he had received Canada’s commitment to address US concerns over duties on dairy products, alcoholic beverages and motor vehicles.
US officials gave no further details. The Canadian government also did not confirm the contents of any agreement.
Existing US auto tariffs had been a major sticking point, according to two industry sources familiar with the negotiations.
The proposed tariffs would have covered about $20bn worth of imports. They would also have applied regardless of whether Canadian goods qualified for preferential treatment under the US-Mexico-Canada trade agreement, which has protected much of Canadian industry from earlier US tariffs.
Trump also said the Keystone XL pipeline, a project cancelled by former President Joe Biden in 2021 after years of opposition from Indigenous groups and environmental campaigners, “may be awoken from the grave.”
He did not provide further details.
Trump has made tariffs a central part of his foreign and trade policies despite legal setbacks and criticism from some analysts.
Tariffs Could Have Led To Job Losses
Trade experts and industry officials had warned that the new tariffs could cause job losses and business closures in vulnerable Canadian sectors, including lumber, wine and dairy.
They also warned that the dispute could complicate wider USMCA negotiations.
Canada’s minister responsible for US trade, Dominic LeBlanc, and chief trade negotiator Janice Charette have been in Washington since last week for talks.
On Monday, the Canadian officials met for nearly two hours with Greer and Commerce Secretary Howard Lutnick.
Greer has repeatedly raised concerns over Canadian tariffs introduced after the initial US tariffs, Canada’s dairy supply management system and some provinces’ refusal to stock US liquor.
In a statement late on Tuesday, the Distilled Spirits Council of the US welcomed Trump’s announcement and called for “a negotiated solution that gets American spirits back on retail shelves in all Canadian provinces and returns the spirits sector to a zero-for-zero tariff framework.”
The two sides have also discussed reducing US Section 232 tariffs on Canadian vehicles from 25% to 15%, with further reductions based on the amount of US content in each vehicle, sources said.
Dispute Over Tariff Deductions
A major disagreement centred on how tariff deductions based on vehicle content should be calculated.
Washington wanted only US-produced content to count, while Canada pushed for all North American content, including Canadian and Mexican parts, to be included, according to sources.
Earlier on Tuesday, the US Commerce Department released new rules requiring automakers exporting from Canada and Mexico to certify their current levels of US content for tariff deductions.
The rules reduce the certification process to once a year from twice.
However, the Federal Register notice said automakers must re-certify vehicles’ US content by September 30 to claim deductions under the new annual cycle beginning on December 1.
A Canadian government source said last week that all options remained available if the new tariffs took effect.
Those options included government support for affected domestic industries and a possible suspension of bilateral trade talks.
The source said Canada remained hopeful that the US was willing to reach a deal.
