US President Donald Trump has paused new 50% tariffs on Canadian goods for three days as the United States and Canada work to complete a trade deal.
Trump made the announcement on Tuesday, less than two hours before the new tariffs were due to take effect. The tariffs would have affected almost $20bn of Canadian imports.
“I have paused the 50% Tariffs against Canada,” Trump said in a social media post. He said the pause was based on a possible deal between the two countries, subject to final documents.
Canadian Prime Minister Mark Carney also said progress had been made. But he warned that key work was still needed before the deal could be completed.
“Substantial progress has been made,” Carney said in a letter posted on X. He added that “important work” remained.
The two countries have been trying to solve several trade disputes. One key issue is US tariffs on Canadian cars. Another is the sale of American alcohol in Canada.
Trump and Carney spoke twice this week. Trade officials from both countries have also held intense talks since July. Trump had set Tuesday as the deadline for the new tariffs.
The planned tariffs would have affected many Canadian goods. These included wine, dairy products, cement, clothing and hockey equipment.
The new duties would have come on top of existing US tariffs on Canadian steel, aluminum, cars and lumber.
Canada has been seeking lower US tariffs on these key goods. The US has asked Canada to make several changes in return.
One US demand is for Canada to remove its retaliatory tariffs on American cars. Washington has also called for changes to Canadian dairy rules. The changes would give US cheese makers greater access to the Canadian market.
The US has also asked Canada to end restrictions on American alcohol sales. Most Canadian provinces introduced the restrictions last year after Trump imposed tariffs on Canadian goods.
A possible agreement on cars was still under discussion before the deadline. US tariffs on Canadian autos could fall from 25% to 15%, according to a report citing people familiar with the talks.
But the two sides had not agreed on which vehicles would qualify for the lower rate. The US wanted the cut to apply only to cars with a high level of American-made parts.
The alcohol issue could also prove difficult. Carney would need support from Canada’s provincial leaders because alcohol sales are controlled by provincial governments.
Ontario Premier Doug Ford said he could support ending the ban on US alcohol. But he said this would depend on reaching a fair trade deal.
Trump also raised the future of the Keystone XL oil pipeline in his post. He said the project could be revived as part of a final agreement.
The proposed pipeline would connect Alberta in Canada with the United States. It was designed to carry about 830,000 barrels of oil each day.
The project has faced strong opposition from environmental groups and Indigenous communities. Both the Obama and Biden administrations blocked the pipeline at different stages.
Trump has repeatedly supported the project. He said Keystone XL could now be brought back.
The trade dispute has placed pressure on businesses in both countries. Companies have warned that higher tariffs could raise prices and hurt trade.
The US Chamber of Commerce urged both governments to reach an agreement. It warned that higher tariffs could damage both economies and raise costs for American families.
The group also said trade under the US-Mexico-Canada Agreement supports about 13 million US jobs.
Canada and the US are major trading partners. Their supply chains are closely linked, especially in the auto, energy and manufacturing sectors.
The three-day pause gives negotiators more time to settle the remaining disputes. A final agreement could ease tensions and prevent another sharp increase in trade costs.
For now, however, no final deal has been signed. The next few days will decide whether Trump and Carney can turn the latest progress into a lasting trade agreement.
