Trump pauses Canada tariffs for three days as trade deal nears completion

With less than two hours to spare before a sweeping tariff regime was set to take effect, Donald Trump announced he would hold off. The 50% levy on nearly $20 billion worth of Canadian goods—wine, dairy, cement, clothing, hockey equipment, and much else—would not arrive Wednesday morning as threatened. Instead, the US president granted a three-day reprieve, citing what he called a "DEAL" between the two countries, though the documents remained unsigned and the details still contested.

The timing was no accident. Trump and Canadian Prime Minister Mark Carney had spoken twice that week alone, and trade negotiators had been locked in intensive talks since July, when the president first issued his August 19th deadline. The two sides had been gridlocked on several fronts: the level of tariffs on automobiles, the quotas Canada would allow for American cheese, and a ban on US alcohol sales that most Canadian provinces had imposed the year before in retaliation for earlier Trump tariffs. Now, with the clock running down, both sides appeared ready to move.

Carney responded cautiously. In a letter posted to social media, he acknowledged that "substantial progress has been made, although there is important work still to be done." The Canadian leader faced a particular constraint: liquor sales are controlled by provincial governments, not Ottawa. Ontario's premier, Doug Ford, whose province had been hit hardest by US auto tariffs, said he would consider lifting the alcohol ban only if the final agreement proved "fair." That buy-in was not guaranteed.

The auto sector remained the thorniest issue. According to reporting from Reuters, negotiators in the final hours before the deadline had discussed reducing US tariffs on Canadian vehicles from 25% down to 15%. But they could not agree on which cars would qualify. The US wanted tariff relief limited to vehicles with a high percentage of American-made content—a position that would reshape supply chains and limit which Canadian-built cars could benefit. That disagreement alone could unravel the entire negotiation.

Trump, meanwhile, had woven a second ambition into the trade talks: the revival of the Keystone XL pipeline. The project, which would carry 830,000 barrels of oil daily from Alberta to the US Gulf Coast, had been blocked by both the Obama and Biden administrations and opposed fiercely by environmentalists and Indigenous groups. Trump had long promised to resurrect it, and now he suggested it could be part of the trade package. "The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!" he wrote on Truth Social.

US Trade Representative Jamieson Greer's office outlined what the administration said the deal would contain: comprehensive market access for American goods, economic security commitments, and digital trade alignment. It would also include protections for the US market and American workers, the statement said, along with provisions for Canadian partners. Canada, for its part, had been pushing hard for the US to drop or reduce tariffs on steel, aluminium, autos, and lumber—sectors vital to its economy.

Business groups on both sides of the border had been urging a settlement. The US Chamber of Commerce warned that higher tariffs would "damage both economies, drive up costs for US families, further disrupt critical supply chains, and risk the 13 million American jobs that depend on trade" under the existing US-Mexico-Canada agreement. The three-day pause offered a narrow window to close the remaining gaps. Whether it would be enough remained unclear.