The United States and Canada reached a last-minute agreement late Tuesday to delay a new round of steep American tariffs on Canadian goods, granting a three-day reprieve as the two countries work to finalise a broader trade deal. US President Donald Trump announced the pause on his Truth Social platform less than two hours before a 50% duty on approximately $20 billion worth of Canadian imports was set to take effect at midnight. "Canada and the U.S.A., subject to the finalization of documents, have a DEAL!" Trump declared, though full details of the agreement have not been disclosed.

Canadian Prime Minister Mark Carney confirmed the suspension would last until 22 August, while striking a more cautious tone. "Substantial progress has been made, although there is important work still to be done," he said, adding that the prospective deal aims to "deliver greater certainty and real benefits for Canadian businesses, workers, farmers and families." The US Trade Representative's office indicated the emerging framework would include "comprehensive market access for all American goods, economic security commitments, and digital trade alignment." Trump also linked the breakthrough to the potential revival of the Keystone XL Pipeline — a long-proposed project that would carry 830,000 barrels of crude oil per day from the Canadian province of Alberta to the US state of Nebraska, and which was blocked by the Biden administration in 2021 on environmental grounds.

The tariffs, which Trump invoked last month using Section 338 of the Tariff Act of 1930 — a provision dating to the Great Depression era and never previously applied — would have applied to goods ranging from wine and dairy products to hockey sticks, cement and electronic equipment. They were imposed in response to what Washington described as Canada's "discriminatory treatment" of American automobiles, alcohol and dairy. Crucially, unlike earlier rounds of tariffs, the new duties would have applied to goods that previously qualified for duty-free treatment under the United States-Mexico-Canada Agreement (USMCA), the trilateral trade pact covering North America. Key sticking points in the negotiations have included US tariffs on Canadian autos — with reports suggesting the two sides were close to reducing the rate from 25% to 15% — as well as bans on American liquor sales that most Canadian provinces imposed in retaliation for earlier US tariffs.

The deal comes against a fraught backdrop. Roughly 70% of Canadian exports go to the United States, making American market access vital to the Canadian economy. Yet public sentiment in Canada has hardened sharply: polling shows majorities of Canadians are unwilling to buy US products even if bans are lifted, and a petition calling for the expulsion of the US ambassador has gathered nearly 218,000 signatures. Analysts note that Carney faces pressure both to protect the economy and to avoid appearing to capitulate. "The Canadian government cannot look like it is simply caving to the Trump administration's demands," said Daniel Béland, a political science professor at McGill University in Montreal. "Making further concessions without getting something meaningful in exchange would probably lead to a strong backlash."

Business groups on both sides of the border welcomed the pause. The US Chamber of Commerce warned ahead of the deadline that higher tariffs would "damage both economies, drive up costs for US families, and risk the 13 million American jobs that depend on trade" under the USMCA. With the three-day window now open, negotiators will face pressure to bridge remaining gaps quickly — including thorny questions over dairy quotas, automobile content rules, and provincial alcohol policies — before the extended deadline arrives.