50% tariffs on Canadian goods pause as Trump and Canada delay deal

50% tariffs on Canadian goods paused as Trump and Canada reach last-minute deal

A suite of new tariffs on Canadian goods have been paused for three days in ongoing talks between the US and Canadian teams, with the announcement made by President Trump on Truth Social just hours before the tariffs were due to come into effect.

"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 U.S.A., subject to the finalization of documents, have a DEAL!" wrote the president at 10:15 pm before the midnight deadline.

Trump referenced the Keystone XL pipeline as a reason for the last-minute tariff abatement. No further details were given on how and when plans for the canceled oil pipeline were to be resurrected.

President Trump and Canadian Prime Minister Mark Carney spoke earlier in the week without a breakthrough, as the 11th-hour talks are expected to continue. The Canadian negotiating team remained in Washington on Tuesday after staying in the US through the weekend for talks.

Last month, Trump announced plans for 50% tariffs on a range of Canadian goods in response to what the US claims are discriminatory trade practices around automobiles, alcohol, and dairy products, with proclamations promising new tariffs "effective as of 12:01 am eastern time on August 19, 2026."

The new tariffs could have limited immediate macroeconomic effects, as only about 5% of Canadian goods that the US imported last year would see the new duties. An analysis from Veda Partners calculated that the average tariff rate on Canadian exports would rise to 6.27% from 4.68%.

Yet success or failure in the talks this week could provide a major signal about the prospects for renewal of the US-Mexico-Canada Trade Agreement (USMCA).

Carney described the talks to reporters Monday as "very intense and delicate." A meeting in Washington on Monday ended with Canada's Trade Minister Dominic LeBlanc telling reporters that "our job is not yet done."

US Trade Representative Jamieson Greer has offered little insight into the US position, telling reporters in Iowa last week that talks have been constructive, but "there are a lot of issues."

"My sense is the Canadians want to have a more conciliatory approach, but we'll see," Greer added.

Read more: 5 ways to tariff-proof your finances

A search for concessions on both sides

The talks have so far centered on concessions, including the US potentially lessening duties on Canadian metals, lumber, and auto components in return for changes to Canadian market access to US goods, such as dairy products, and a reduction of retaliatory tariffs.