Trump pauses 50% Canada tariffs as trade deal nears

US President Donald Trump has paused the planned imposition of 50 per cent tariffs on selected Canadian goods for three days, raising hopes that Washington and Ottawa are close to reaching a broader trade agreement after weeks of intense negotiations.

Trump announced the temporary reprieve just hours before a midnight deadline, saying the decision was based on the belief that the United States and Canada had reached a deal, subject to finalising the necessary documents.

Canadian Prime Minister Mark Carney offered a more cautious assessment, saying that “substantial progress has been made” towards a comprehensive agreement but stressing that important work remained.

The negotiations centre on revising the existing United States-Mexico-Canada Agreement, or USMCA. Trump, who signed the pact during his first term, has increasingly pushed for changes to the trade arrangements between the two North American neighbours.

According to the US Trade Representative’s office, a potential agreement could provide wider market access for American goods while covering economic security commitments and digital trade rules.

The tariff suspension followed Canadian commitments to address what the Trump administration described as discriminatory or unfair treatment of US products. Trump had ordered the 50pc duties last month, accusing Canada of imposing barriers on American alcohol, automobiles and dairy products.

The proposed tariffs would affect products including wine, hockey sticks and cement. Oxford Economics estimates that the targeted goods represent about 5.5pc of Canada’s exports to the United States, valued at roughly $20 billion.

Although the overall impact on the Canadian economy is expected to be limited, analysts warn that manufacturers in central Canada could face significant pressure. Industries including cement, paper, printing, wood, clothing and electronics could be particularly vulnerable.

Canadian negotiators have also sought relief from existing US tariffs affecting major sectors such as automobiles, steel, lumber and aluminium. Ottawa has reportedly considered concessions, including encouraging provinces to restore American alcohol and wine products to store shelves.

Trump also revived discussion of the controversial Keystone XL pipeline, suggesting the long-delayed project could potentially be brought back. The pipeline was blocked during the administration of former US president Joe Biden and has remained a contentious issue among environmental groups.

Trade negotiations have frequently continued until the final deadline, according to former US commerce official Christopher Padilla. He suggested that the threat of tariffs may have been used by Washington to secure concessions from Canada.

For businesses on both sides of the border, the three-day pause offers temporary relief. The key question now is whether negotiators can turn the latest progress into a lasting agreement before the tariff deadline returns.