Canada will temporarily avoid hefty taxes that were set to go into effect at midnight after last-minute talks to avoid President Donald Trump’s latest tariff threat. Trump, posting on the social media platform he owns, announced that he agreed to pause the 50% levies, which were slated to be applied to nearly $20 billion worth of Canadian goods, for now at least. The agreement is subject to the fine print being finalized, he said.
“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 wrote on Truth Social, which offers investors a service to receive his posts early.
The parameters of the deal were not immediately clear, but Trump hinted at the possibility that the Keystone XL Pipeline project, a 1,000-mile extension of a major crude oil transport system, could be revived as part of a deal. He added, “The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!”
Last month, the White House accused Canada of discriminating against American cars, alcohol and dairy products in retaliation for previously imposed U.S. tariffs. As a consequence, American officials set a Wednesday deadline for the 50% duties, which would stack on top of any existing duties that apply to those imports. The tariffs threaten to significantly affect both businesses and consumers.
Canadian Prime Minister Mark Carney and Trump spoke by phone Tuesday afternoon, according to the prime minister’s office. U.S. Trade Representative Jamieson Greer, speaking to reporters in Iowa last week, said any resolution with Canada would address a broad range of trade issues between the nations.
Greer, a central player in trade talks, hinted that Canadian negotiators preferred a “conciliatory approach” rather than new retaliatory measures. “For us, this is not a trade war. We have domestic supply chains we’re trying to protect and support,” he said. “It’s not Canada specific. We’re doing this globally.”
The U.S. and Canada have had a tumultuous trade relationship under Trump’s second term. Trump casts Canada’s economy as reliant on the U.S. despite both countries being among each other’s top trading partners. The U.S. moved to impose hefty 50% tariffs on steel and aluminum products from Canada last year.
Trump has disparaged Canada’s government, saying the country has “nasty leadership” and referring to Carney as “the future governor of Canada,” in a nod to Trump’s overtures to acquire his northern neighbor.
“Canada lives because of the United States,” Trump said at the World Economic Forum in January after Carney made implicit references to his tariffs campaign. “Remember that, Mark, the next time you make your statements.”
Officials are also currently hashing out a review of a broad trade agreement between the U.S., Mexico and Canada, known as the USMCA, putting its future in jeopardy. The Trump administration is pushing for more advantages for U.S. workers and companies, describing years worth of trade imbalances.
For the U.S., Canada remains its second-largest trade partner after Mexico, with $333 billion in exports last year, according to the U.S. Census Bureau. Meanwhile, the U.S. is Canada’s biggest overall trading partner with $381 billion in purchases from American retailers in 2025.
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