RESOLVING THE LEDGER
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President Donald Trump welcomes Canadian Prime Minister Mark Carney outside the West Wing of the White House on Oct. 7, 2025, in Washington, D.C. —Anna Moneymaker––Getty Images
President Donald Trump announced late Tuesday a temporary pause on 50% tariffs on Canada as both countries race to finalize a trade deal.
The President’s announcement came hours before a series of tariffs set to cover about $20 billion worth of imports into the U.S. from Canada were set to take effect.
“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 said on social media.
Canadian Prime Minister Mark Carney released a statement moments later, confirming that there had been “intensive discussions” with the U.S. to “address outstanding trade issues.”
“Substantial progress has been made, although there is important work still to be done,” he said.
The tariffs will now be paused until Aug. 21, subject to the finalization of an agreement between the two countries.
U.S. Trade Representative Jamieson Greer said the deal will include "comprehensive market access for all American goods, economic security commitments, digital trade alignment," along with other provisions.
Trump added in his social media post that the Keystone XL pipeline —a cross-border oil pipeline project between the U.S. and Canada that was canceled by former President Joe Biden in 2021 after pushback from environmentalists, Native American tribes, and Indigenous advocates—"may be awoken from the grave," but did not provide further details.
The President later posted what appeared to be an AI-generated image of himself dragging the Keystone pipeline out of the ground.
Neither side has provided further confirmation about the contents of the agreement.
TIME has reached out to both the White House and the Prime Minister's office for comment.
U.S. and Canada push toward a deal
Carney said earlier this week that he planned to speak with the U.S. President ahead of the tariff deadline. The announcement follows a period of negotiations between the two sides.
During a tour of a tire factory in Iowa last week, Greer told reporters that the U.S. and Canada were engaged in “constructive negotiations” but warned that if a “country retaliates” they would “take action.”
Canada's minister responsible for U.S. trade, Dominic LeBlanc, and chief trade negotiator Janice Charette have been in Washington since last week for talks.
The negotiations unfolded against a backdrop of ongoing grievances between the two countries, including Trump’s repeated statements about his desire to annex Canada and make it the 51st U.S. state —an idea Carney has strongly pushed back against.
In August, Carney took a swipe at Trump, mocking the U.S. President after a teleprompter malfunctioned in the middle of an on-camera speech.
The tense relationship between the pair has also played out over the Gordie Howe International Bridge —a cross-border bridge connecting the two countries that has repeatedly become a source of disagreement between Washington and Ottawa.
How U.S.-Canada trade tensions escalated
The last-minute tariff pause comes after more than a year of escalations between the two countries.
In February 2025, the White House hit Canada with a 25% tariff on most goods and 10% on energy resources, citing what it regarded as inadequate progress in curbing cross-border illegal immigration and drug trafficking.
Canada then imposed tariffs on some vehicle imports from the U.S. in April 2025, amid a larger trade war sparked by Trump’s global tariffs —the majority of which were struck down by a Supreme Court ruling earlier this year.
The 50% tariff hike on a range of Canadian goods was announced in July, with Trump signing a series of proclamations citing Canada’s “discriminatory treatment” of American products.
The new levy, a retaliation for Canada’s tariffs , would apply to a range of Canadian goods, including electronics, sports equipment, and essential oils.
The Administration had also announced targeted new tariffs on Canadian dairy products and exports of wine and other alcoholic beverages .
According to economists, the tariffs could have had significant economic consequences if enacted. TD Economics estimated that, if maintained, they could reduce Canadian GDP growth by 0.3 to 0.6 percentage points over the following year.
A Canadian Federation of Independent Business survey of 1,833 firms found that 77% of affected exporters expected revenue losses, while 35% expected their revenue to fall by at least half.
In a new proclamation issued Tuesday suspending the tariffs, Trump said: “Canada has expressed a commitment to remove the discriminations or unreasonable and unequal impositions.”
In a statement late Tuesday, the Distilled Spirits Council of the U.S. applauded Trump's announcement and called for "a negotiated solution that gets American spirits back on retail shelves in all Canadian provinces and returns the spirits sector to a zero-for-zero tariff framework."
The new tariffs were set to apply despite the U.S.-Mexico-Canada trade agreement (USMCA)—which had shielded Canadian industries from earlier U.S. tariffs.
The USMCA, which was signed by Trump in 2018, is a trilateral agreement that eliminated or reduced tariffs on goods traded between the nations of North America. It governs nearly $2 trillion in annual trade among the three countries.
In early July, the U.S. declined to renew the U.S.-Mexico-Canada Agreement for a 16-year term. Rather than terminate it outright, this puts the USMCA under annual review. Trade experts told TIME that the move is expected to carry profound long-term economic consequences.
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