Trump pauses new tariffs on Canada and says countries close to a deal
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- Donald Trump paused 50% tariffs on Canadian goods for three days via a Truth Social post, announced less than two hours before the levy was set to take effect on nearly $20bn (C$28bn) of Canadian imports including wine, dairy, cement, clothing, and hockey equipment.
- Trump said a finalized deal could revive the Keystone XL pipeline — blocked by the Obama and Biden administrations — which would carry 830,000 barrels of oil per day from Alberta to the US.
- US and Canadian negotiators were discussing reducing US tariffs on Canadian autos from 25% to 15%, but remained deadlocked on which vehicles would qualify, with the US pushing to limit reductions to cars with high American-made content.
- Prime Minister Mark Carney and Trump spoke twice this week, with trade talks intensifying since July after Trump's August 19 deadline threat; Carney must secure provincial premiers' buy-in to lift Canada's ban on US alcohol sales, which provinces — not the federal government — control.
- Ontario Premier Doug Ford, whose province is hardest hit by US auto tariffs, said he would lift the liquor ban only if a "fair deal" is reached.
- The US Chamber of Commerce urged a deal on Tuesday, warning that higher tariffs would damage both economies, drive up costs for US families, and risk the 13 million American jobs tied to trade under the USMCA.
- Canada is pushing to drop or reduce US tariffs on steel, aluminum, autos, and lumber, while the US is demanding Canada remove remaining retaliatory tariffs on American autos, adjust dairy quotas for greater US cheese access, and end the provincial alcohol ban.
Why it matters: A three-day window is razor-thin for finalizing documents on a trade relationship worth roughly $20 billion in newly tariffed goods — and the auto sector (25% tariff under negotiation down to a possible 15%) is Canada's largest export to the US. The Keystone XL revival, if it materializes, would add 830,000 barrels/day of pipeline capacity but faces long-standing opposition from environmental and Indigenous groups. Ontario Premier Doug Ford's condition that the liquor ban lift only comes with a "fair deal" gives provinces a hard veto over the final package.
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