Trump pauses 50 percent tariffs on Canada in last-minute deal

The United States and Canada have reached a last-minute deal to delay steep tariffs on billions of dollars of Canadian goods, granting a temporary reprieve to exporters fearful of a renewed trade war between the trade partners.

US President Donald Trump made the announcement shortly before the 50 percent duty was due to take effect at midnight.

Canadian Prime Minister Mark Carney confirmed shortly afterwards that the US had agreed to suspend the tariffs until August 22.

The 11th-hour breakthrough came after Trump and Carney held talks on Tuesday aimed at finding common ground after weeks of fraught trade negotiations.

The tariffs would have applied to some $20.2bn worth of Canadian exports, affecting goods ranging from electronics and industrial machinery to furniture, dairy products and wine.

In a post on Truth Social on Tuesday, Trump said he agreed to a three-day pause in the tariffs after the sides reached a deal “subject to finalization of documents”.

Neither Trump nor Carney provided details of the agreement, but the US president appeared to link the breakthrough to his efforts to revive the Keystone XL Pipeline.

The Keystone XL Pipeline, which has faced strong opposition and numerous delays since it was first proposed in 2008, would transport about 830,000 barrels of crude oil each day between Alberta, Canada, and Nebraska, US.

Former US President Joe Biden revoked a key permit for the US stretch of the pipeline in 2021 on environmental and economic grounds, effectively killing the project.

“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” Trump said in his social media post.

Carney said that while “substantial progress” had been made in the negotiations, there was “important work still to be done”.

“While we continue this work, Canada remains focused on building a stronger, more independent, and more competitive economy at home,” Carney said in a statement provided by his office.

Andreas Schotter, a professor of international business at Ivey Business School in London, Ontario, said that while the announcements contained few specifics, the inclusion of the Keystone XL Pipeline in the negotiations appeared to be an attempt to play to Trump’s ego.

“Not because of the oil transport benefits, but because it was President Biden who actually stopped it, and this, among many things, pushed the loudest of the multitude of big red ‘ego’ buttons with President Trump,” Schotter told Al Jazeera.

“Let’s see if we really get to a deal by Friday or if we are back at a Groundhog Day moment,” Schotter said.

The pause in tariffs will come as welcome relief for Canadian exporters, who depend on US consumers more than on any other market.

Approximately 70 percent of Canadian exports go to the US, while the US sends about 30 percent of its exports to Canada.

Trump announced the tariffs, invoked with the first-ever use of Section 338 of the Tariff Act of 1930, last month in response to Ottawa’s “discriminatory treatment” of US automobiles, dairy products and alcoholic drinks.

While Trump has announced a slew of punitive trade measures against Canada since re-entering the White House, the latest proposed tariffs are notable for applying to goods that qualify for duty-free treatment under the United States-Mexico-Canada Agreement.

Carve-outs in the three-way deal, which was ratified during the first Trump administration, have allowed a large majority of US-Canadian trade to remain tariff-free until now.

Canadian officials have spent weeks in Washington seeking to persuade the Trump administration to drop the tariffs in exchange for trade concessions.

Carney has openly acknowledged the fraught nature of the negotiations, variously describing the talks as “nasty”, “delicate” and “intense”.

Ottawa’s efforts have been complicated by the need to bring the country’s provinces on board with any deal.

Eight of Canada’s 10 provinces have blocked sales of US-made alcoholic beverages since early last year in retaliation for Trump’s trade salvoes, which Washington has named as a rationale for the latest tariffs.

Canadian provincial leaders have also expressed reluctance to make concessions on the country’s supply management system, another one of the Trump administration’s grievances, which sets production and import quotas for dairy, eggs and poultry.

Carney also faces a public mood that has soured on its southern neighbour.

In an opinion poll conducted by Nanos Research in July, 69 percent of Canadians indicated they were not likely to buy US alcohol even if authorities lifted their bans.

In polling released by the Angus Reid Institute earlier this month, 48 percent of respondents said they had an unfavourable view of Americans, compared with 45 percent who had a positive impression.

Stewart Prest, a lecturer of political science at the University of British Columbia, said there is a strong sense of defiance among Canadians in response to Trump’s trade threats.

“The damage of new tariffs would be significant in specific sectors, and I think Canadians are aware of that and concerned, but there is also a feeling of a kind of national pride, that Mark Carney and the premiers have to keep in mind as well,” Prest told Al Jazeera.

“The majority of Canadians want to see our sovereignty defended, and are not interested in trade peace at any price.”