President Donald Trump’s threat of a 50% tariff on a wide range of Canadian goods will not take effect at 12:01 a.m. ET, he announced hours before, sparing roughly $20 billion worth of imports.
“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!” Trump wrote late Tuesday on Truth Social.
In his post, Trump referred to the Keystone XL pipeline, which he said “may be awoken from the grave!” without providing further details.
The tariffs would have covered products including dairy, alcohol and furniture — about 5% of the total value of US imports from Canada last year.
The deal comes after days of meetings. Canadian Prime Minister Mark Carney and Trump spoke on Monday and Tuesday as negotiations continued, with Carney describing the talks with the Trump administration as “very delicate and intense.”
Trump had planned to rely on a little-known law from the 1930s that has never been used to impose tariffs in this way. The administration’s use of the law was expected to face legal challenges.
But, until a court weighs in, he would be able to apply it – as was the case with the sweeping duties the Supreme Court overturned earlier this year.
Trump specifically targeted Canada, alleging that it made it harder for the US to export dairy, cars and alcohol. Canada was also the only country besides China to retaliate against Trump’s earlier tariffs, though Carney later rolled back most of those measures.
Unlike some of the other statutes Trump has turned to after the Supreme Court struck down his sweeping tariffs earlier this year, this trade law, known as Section 338, does not appear to impose a time limit on the duties. Had the tariffs taken effect, they could have remained in place indefinitely unless Trump or a future president chose to remove them.
The potential reach was also broad. The Canadian goods targeted in the proposed tariffs extended well beyond the products at the heart of Trump’s stated grievances, covering industrial equipment, plastics, furniture, clothing and other manufactured goods.
There’s another notable difference from Trump’s recent tariffs: There are no exemptions here for goods that comply with the US-Mexico-Canada Agreement. That means even products that otherwise qualify for preferential treatment under the North American trade pact could have been included in these duties.
The tariffs may ultimately have been intended as another negotiating tactic. Canada, whose economy has already been weakened by previous rounds of tariffs, had been actively engaging with US officials as the two countries tried to resolve their broader trade dispute. With the USMCA itself up for review, Trump had another major point of leverage.
