Trump Suspends Additional 50% Tariffs on Canadian Goods; Canadian Prime Minister Says "Key Work Is Still Underway"

According to Zhihu Finance APP, US President Trump announced on Tuesday night that the new 50% tariffs on Canadian goods, originally scheduled to take effect at midnight, will be suspended for three days, stating that the two countries have reached an agreement. About an hour later, Canadian Prime Minister Mark Carney issued a statement saying, “Substantial progress has been made, but there is still key work to be done.”

Trump posted on his Truth Social platform that, based on “an agreement (pending final documentation) between Canada and the United States,” he has decided to pause the tariff hike. Trump and Carney spoke on Tuesday afternoon, their second conversation this week, with the negotiating teams having held several weeks of intensive and discreet talks.

In his statement, Carney said: “As we continue this work, Canada remains focused on building a stronger, more independent, and more competitive domestic economy.” The Office of the US Trade Representative Greer stated that the agreement will include “comprehensive market access for all US goods, economic security commitments, digital trade alignment” and other terms.

A notice published on the White House website showed that Trump had received commitments from Canada addressing US concerns about dairy, alcoholic beverages, and auto tariffs. US officials did not provide further details, and the Canadian government also did not confirm any contents of the agreement.

The new tariffs were set to cover about $20 billion in imports

The new tariffs would have applied to about $20 billion of Canadian imports, regardless of whether these goods qualified for preferential treatment under the US-Mexico-Canada Agreement (USMCA)—previously, the USMCA had allowed most Canadian sectors to avoid early US tariffs. Trade experts and industry officials previously warned that the new tariffs could result in job losses and business closures in vulnerable sectors such as Canadian lumber, wine, and dairy, and could further complicate broader USMCA negotiations.

Trump also mentioned on social media that the Keystone XL pipeline project, which was canceled by former President Biden in 2021, “might be revived,” but did not give further details.

Major disagreement remains on how auto tariffs deductions are calculated

During previous negotiations, the main point of contention was how to calculate tariff deductions based on US content in auto parts. The US side demanded that only parts produced domestically in the US be counted, while the Canadian side argued that the calculation should include all North American content, including parts from Canada and Mexico.

Earlier on Tuesday, the US Department of Commerce issued new regulations requiring automakers exporting from Canada and Mexico to certify annually their US content levels for tariff deductions—reducing the previous certification frequency from twice a year to once annually. However, the Federal Register notified that automakers must recertify US content by September 30 in order to apply for deductions in the new annual cycle starting December 1.

A Canadian government source said last week that if the new tariffs take effect, Canada does not rule out any response options, including government support for affected domestic industries and possibly suspending bilateral trade negotiations, but the source expressed optimism about the US side’s willingness to reach an agreement.

Numerous uncertainties remain in the US-Canada trade dispute

Dominic LeBlanc, Canada’s minister responsible for US trade affairs, and chief negotiator Janice Charette have been in negotiations in the US since last week. On Monday, Canadian officials met with Greer and Commerce Secretary Howard Lutnick for nearly two hours. Greer has repeatedly raised concerns about Canada’s retaliatory tariffs after the initial US tariffs, Canada’s dairy supply management system, and some provinces refusing to stock US alcohol.

The US Distilled Spirits Council issued a statement Tuesday night welcoming Trump’s announcement, and urged that a “negotiated solution be found to return US spirits to retail shelves in all Canadian provinces and restore zero-tariff reciprocal trade for the spirits industry.” The outlook for the US-Canada trade dispute remains highly uncertain.