President Donald Trump’s announcement regarding a potential 50% tariff on a broad array of Canadian goods will not be implemented at 12:01 a.m., as he revealed just hours prior, thereby exempting approximately $20 billion in 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 mentioned the Keystone XL pipeline, asserting that it “may be awoken from the grave!” without elaborating further. The tariffs would have encompassed products such as dairy, alcohol, and furniture — representing approximately 5% of the total value of US imports from Canada in the previous year. The three-day postponement follows several days of discussions. Canadian Prime Minister Mark Carney and Trump engaged in discussions on Monday and Tuesday as negotiations progressed, with Carney characterising the interactions with the Trump administration as “very delicate and intense.”
In a statement issued late Tuesday, Carney confirmed that the implementation of tariffs had been deferred until the end of the day on August 21. “Substantial progress has been made, although there is important work still to be done,” he stated. Trump had intended to utilise a relatively obscure statute from the 1930s that has not previously been employed to impose tariffs in this manner. The administration’s application of the law was anticipated to encounter legal challenges. However, until a court provides a ruling, he would be permitted to implement it – similar to the extensive duties that the Supreme Court invalidated earlier this year. Trump specifically targeted Canada, alleging that it impeded US exports of dairy, automobiles, and alcohol. Canada was the sole nation, apart from China, to respond to Trump’s prior tariffs; however, Carney subsequently retracted the majority of those actions.
In contrast to various other statutes that Trump has utilised following the Supreme Court’s annulment of his extensive tariffs earlier this year, this particular trade law, referred to as Section 338, seemingly lacks any temporal restrictions on the duties. Had the tariffs been implemented, they might have persisted indefinitely unless Trump or a subsequent president opted to rescind them. The potential reach was also extensive. The Canadian goods identified in the proposed tariffs encompass a broad range of items that extend significantly beyond the specific products associated with Trump’s articulated concerns, including industrial equipment, plastics, furniture, clothing, and various other manufactured goods. There exists a significant distinction from Trump’s recent tariffs: this time, there are no exemptions for goods that adhere to the US-Mexico-Canada Agreement. That implies that even items that would typically be eligible for preferential treatment under the North American trade agreement might have been subject to these tariffs.
Carney had said earlier this year the tariffs were a “direct violation” of that trade pact and warned in July the trade dispute has “raised costs for families, particularly in the U.S.” The US Chamber of Commerce had also warned Tuesday that higher tariffs “would damage both economies, drive up costs for U.S. families, further disrupt critical supply chains, and risk the 13 million American jobs that depend on trade” under the US-Canada-Mexico Agreement. The tariffs may ultimately have been intended as yet another negotiating tactic. Canada, which has already experienced economic strain from prior tariffs, has been actively engaging with US officials as both nations seek to address their overarching trade dispute. With the USMCA itself under review, Trump possessed another significant point of leverage.
