US President Donald Trump has announced a three-day suspension of 50 per cent tariffs on selected Canadian goods, hours before the midnight deadline, as Washington and Ottawa signal progress towards a broader trade agreement.
Trump said the reprieve was granted because Canada and the United States had reached a deal, subject to finalising the necessary documents.
However, Canadian Prime Minister Mark Carney struck a more cautious tone, saying “substantial progress” had been made towards a comprehensive trade agreement, but important issues remained unresolved.
The two countries have been engaged in intensive negotiations to revise the United States-Mexico-Canada Agreement (USMCA), which Trump signed and praised during his first term but now wants to amend.
The US Trade Representative’s office said the proposed agreement would include comprehensive market access for American goods, economic security commitments and alignment on digital trade, among other provisions.
Trump’s proclamation suspending the tariffs said Canada had committed to addressing what Washington described as discriminatory or unreasonable trade measures.
Carney said the potential agreement was aimed at resolving outstanding trade disputes and providing greater certainty and economic benefits for Canadian businesses, workers, farmers and families.
Trump had ordered the 50pc tariffs last month, accusing Canada of discriminatory treatment of US alcohol, automobile and dairy products.
The duties would apply to a range of Canadian products, including wine, hockey sticks and cement, and are estimated by Oxford Economics to cover around 5.5pc of Canada’s exports to the United States, worth approximately $20 billion.
Oxford Economics said the tariffs would pose a modest overall risk to Canada’s economy but could have a significantly greater impact on the manufacturing sector in central Canada.
Canadian negotiators have been holding talks in Washington in an effort to prevent the new tariffs and seek relief from existing US duties on Canadian automobiles, steel, lumber and aluminium.
Ottawa has reportedly offered concessions, including efforts to persuade provinces to restore US alcohol and wine products to store shelves.
Trump also suggested the possible revival of the Keystone XL pipeline, a controversial project opposed by environmental groups that was halted by former US president Joe Biden.
Former US Commerce Department official Christopher Padilla said it was not unusual for trade negotiations to continue until the deadline.
He said the Trump administration appeared to have used the threat of higher tariffs to secure concessions from Canada during negotiations over changes to the USMCA.
Oxford Economics identified manufacturers in the cement, paper, printing, wood, clothing and electronic equipment sectors as among those likely to be most affected.
The new tariffs were introduced after the US Supreme Court struck down many of Trump’s global tariffs earlier this year, prompting the administration to rely on a different legal provision for the measures targeting Canada.
The suspended duties will not apply to Canadian energy, potash or products already subject to sector-specific tariffs. However, they are expected to affect goods covered under the USMCA.
US Trade Representative Jamieson Greer had previously said the tariffs were intended to hold Canada accountable for retaliatory measures, including restrictions on US alcohol products and increased market access for dairy products from the European Union.
