Trump postpones Canadian tariffs while trade deal talks advance
Developing story first seen 3 hours ago
US President Donald Trump has paused a planned 50% tariff on Canadian goods worth nearly $20bn (C$28bn), which had been due to take effect just hours later, saying the two countries are close to finalising a trade deal. The move follows weeks of intense negotiations between Canadian and US officials, and comes after Trump and Canadian Prime Minister Mark Carney spoke twice this week to try to resolve disputes over auto tariffs and provincial bans on American liquor sales.
Trump said the three-day pause was contingent on finalising documents for the deal, which he suggested could also revive the long-stalled Keystone XL oil pipeline linking Alberta to the US. Sticking points include reducing US tariffs on Canadian autos from 25% to 15%, which vehicles would qualify, and whether Canadian provinces will lift retaliatory bans on US alcohol. The US has also sought greater access for its dairy producers, while business groups on both sides, including the US Chamber of Commerce, had warned that the tariffs risked damaging both economies and up to 13 million American jobs tied to trade under the US-Mexico-Canada Agreement.
- Trump delays 50% tariff on Canadian goods for three days
- Deal reportedly close after intense US-Canada negotiations
- Keystone XL pipeline revival floated as part of agreement
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Trade between the United States and Canada is worth hundreds of billions of dollars a year and is governed by an agreement known as the USMCA, which replaced NAFTA a few years ago. Tariffs are taxes a government charges on goods entering the country, and Donald Trump has used the threat of new tariffs against various countries, including Canada, as a way to pressure them into changing trade or other policies.
The current dispute centres on cars, alcohol and dairy products. Washington has wanted lower barriers for its dairy exports and has objected to some Canadian provinces banning the sale of American alcohol, while both sides have been discussing what tariff rate should apply to vehicles built in Canada, many of which cross the border multiple times during manufacturing.
Mark Carney, Canada's prime minister, has been leading talks with Trump on behalf of his government, and business groups in both countries have said a full-blown tariff war could hurt jobs and economic growth on both sides of the border. The outcome matters because the two economies are closely linked through manufacturing supply chains and cross-border trade in everyday goods.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of the tariff-driven approach argue that trade leverage of this kind is precisely what has brought Canada back to the negotiating table on issues that had been stuck for years, such as auto tariffs and provincial alcohol bans. They contend that without the credible threat of a 50% tariff, Ottawa would have little incentive to offer meaningful concessions on dairy market access or vehicle rules of origin, and that a tougher negotiating posture ultimately protects American manufacturing jobs and secures a fairer, more balanced deal than a purely conciliatory approach would achieve.
The case against
Critics argue that using steep tariffs as a negotiating tool imposes real and immediate economic harm, pointing to warnings from the US Chamber of Commerce that up to 13 million American jobs tied to USMCA trade could be put at risk. They contend that the volatility of threatened tariffs, even when paused, damages business confidence and investment in two deeply integrated economies, and that a stable, predictable trading relationship built on the existing USMCA framework serves both nations' long-term interests far better than brinkmanship that could still collapse the talks.
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Originally published by BBC World as “Trump pauses new tariffs on Canada and says countries close to a deal”.