President Donald Trump announced late Tuesday that he has paused the implementation of 50% tariffs on Canadian goods for three days. The president stated on Truth Social that the delay is intended to allow for the finalization of documents for a trade deal between the United States and Canada. The announcement occurred hours before the tariffs were scheduled to take effect at midnight.
The proposed tariffs were threatened last month under Section 338 of the Tariff Act of 1930. The Trump administration cited "discriminatory" trade measures as the reason for the action. Section 338 allows a president to impose duties of up to 50% on countries found to discriminate against American products, though the law has not been used previously.
The temporary pause follows discussions between President Trump and Canadian Prime Minister Mark Carney on Monday and Tuesday. Prime Minister Carney described the negotiations as "very intense and delicate" on Monday. According to reports, Canadian officials have sought to stop the Section 338 tariffs while also seeking to reduce Section 232 tariffs on steel and aluminum.
The scale of the potential impact involves billions of dollars in trade, given that the affected goods represent 5% of Canada's total exports to its largest trading partner. For a household or business purchasing these items, a 50% tariff generally results in a direct increase in the landed cost of the product, which is often passed on to the final buyer. Additionally, President Trump indicated that the Keystone XL pipeline, a project previously halted by the Biden administration, may be restarted as part of the broader discussions.
The situation sets a precedent for the use of Section 338, a trade authority that has remained dormant since its creation in 1930. U.S. Trade Representative Jamieson Greer stated that the administration will not tolerate retaliation from other countries, referring to Canadian responses to previous "liberation day" tariffs. The three-day pause is currently set to expire at the end of the week, by which time officials hope to have finalized the necessary documents to formalize a deal and potentially avoid the duties.