Trump pauses 50% tariffs on Canada as last-minute trade deal emerges

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The reprieve gives both sides breathing space, but major details on agriculture and alcohol remain unresolved.Advertisement.pagenode__2684512 #comment_box{display:none}.section__education .description.paywall .elec_stripe_iFrame {display: none;}.dark-mode .livetv__sticky svg path{stroke: #fff;} .dark-mode .livetv__sticky svg text{fill:#fff}.tbl-read-more-box {z-index:991 !important}.airtel_5g{width:0px !important;height:0px !important;}table .shopping__widget {display:none}table .inline_ad2 {display: none;}.trinity__container{display: none;} .autiostory a{display: none !important}.description table{max-width:100%;border: 0;margin-bottom: var(--widgetgap);} table tr td #teads-ad{display:none}table tr td .ads__container{display:none}ul>li div#shoppingWidgetLSH{display:none}ul>li div#shoppingWidget_mobile{display:none}.Story_story__content__body__qCd5E .Story_description__fq_4S>ul>li:has(.inline-story-add) div { display: none; }.pagetype__story ul li #checktheseout2{display: none}.newspress_rhs_widget .mframe { background: url(https://akm-img-a-in.tosshub.com/sites/misc/img/iphone-frame.png); }.ads_container .top_ad>* * { text-align: center; margin: 0 auto; }.ite_mg_banner:nth-of-type(2) { display: none; } .pagenode__2672529 .inline_ad2{display:none}Stock photo used for illustrationIndia Today World DeskWashington,UPDATED: Aug 20, 2026 01:58 IST .ai_assist_bar2 { top:30px } Canada has, for now, avoided US President Donald Trump’s threat to impose 50 per cent tariffs on USD 20 billion worth of Canadian imports. Less than two hours before the levies were due to take effect, Trump said on social media late on Tuesday that they would be paused for three days. Speaking to reporters at the White House on Wednesday, Trump said talks with Canada had produced a “very fair deal for both” sides. “Our farmers are going to be thrilled, our manufacturers are going to be thrilled,” he said during an impromptu interaction while touring construction on the South Lawn. He added that the agreement was subject to the “finalization of documents”. For now, the tariffs have been postponed until 12:01 am Saturday. Canadian minister responsible for Canada-US trade Dominic LeBlanc returned to Ottawa on Wednesday to meet Prime Minister Mark Carney, who was also due to chair a Cabinet meeting and a virtual meeting with provincial and territorial leaders. The threatened US tariffs would have affected about 5 per cent of Canada’s exports to the United States. Last month, Trump invoked a legal authority dating back to the Great Depression that had never been used before to announce the 50 per cent tariffs on USD 20 billion of Canadian exports to the US, covering goods ranging from hockey sticks to tongue depressors. Trump said Canada discriminates against American exports of autos, alcohol and cheese. He has also been angry that Canada and China were the only countries to respond with retaliatory tariffs after he imposed levies on their products. The two countries have had trade disputes for decades, including over Canadian softwood lumber and US access to Canada’s protected dairy market. Details of the emerging agreement remained unclear on Wednesday, but Trump said Canada had agreed to end tariffs on US agricultural products. “The tariffs will be non-existent for our farmers. Our farmers were paying tremendous tariffs into Canada, and those tariffs are going to be totally eviscerated. Down to zero,” he said. Canada currently allows a fixed quantity of dairy imports at low tariffs, after which much higher tariffs apply. The US says Canada’s supply management system makes it harder for American dairy producers to get full access to the market. LeBlanc told reporters in Washington that Canada’s “agriculture sector will be well protected and we have maintained our tough line”. That leaves open the question of how Canada can preserve supply management while also giving US farmers the extra access Trump says they will receive. It is also not clear what Canada would gain from the arrangement. Carney has said the emerging agreement would provide greater certainty and preserve favourable terms for key sectors, but Ottawa has not set out what tariff relief Washington has offered. In his Truth Social post announcing the three-day pause, Trump said the long-cancelled Keystone XL pipeline “may be awoken from the grave”. He also posted an illustration of himself handling a pipeline, but did not say whether reviving Keystone XL was part of the agreement. The White House did not respond to a request for more details. Earlier this year, Trump approved a major new Canada-to-US pipeline known as “Keystone Light”, which would carry up to 550,000 barrels of oil a day from Canada through Montana and Wyoming before linking with another pipeline. Keystone XL had been designed to carry up to 830,000 barrels of crude a day from Canada’s oil sands to Nebraska and then to refineries on the US Gulf Coast. The project became a major political and environmental dispute: President Barack Obama rejected it in 2015, Trump revived it in his first term, and President Joe Biden cancelled its permit in 2021. The Canadian company behind it later abandoned the project. A Canadian government official familiar with the matter said Carney had already raised the idea of reviving Keystone XL with Trump at the White House in October 2025, and Trump had been receptive. The official said such a revival would fit a long-standing Canadian objective rather than amount to a new US concession. Carney did not mention the pipeline in his latest statement or spell out what Canada had agreed to in the wider trade talks. Another issue is alcohol. Eight of Canada’s 10 provinces restrict or ban US alcohol, measures introduced in retaliation for Trump’s earlier tariffs on Canadian goods and amid anger over his repeated remarks about making Canada the 51st US state. The Distilled Spirits Council says US spirits exports to Canada have fallen by more than 70 per cent. Ontario is especially significant because its government-run LCBO, one of the world’s biggest alcohol buyers, used to sell nearly CAD 1 billion worth of US products every year before removing them from shelves. The White House says the emerging deal includes a Canadian commitment to address those restrictions. But Carney cannot direct provinces to restore sales, and provincial leaders may resist if the wider deal does not meet their priorities. Quebec is focused on dairy supply management, Ontario on protecting its auto industry, and British Columbia on softwood lumber. The wider backlash has also gone beyond liquor stores, with Canadian travel to the United States falling sharply, and sales may take time to recover even if US alcohol returns. The agreement could also help move the two sides towards broader trade talks. The US is renegotiating the US-Mexico-Canada Agreement, and while formal talks have begun with Mexico, they have not yet started with Canada. Wendy Cutler, a former US trade negotiator who is now senior vice president at the Asia Society Policy Institute, said that if the threat of 50 per cent tariffs is removed, it “should help pave the way for formal US-Canada negotiations”. Both countries had reasons to avoid a further escalation: nearly 72 per cent of Canada’s goods exports last year went to the United States, while the Trump administration may also be wary of imposing a major new tariff ahead of November’s midterm elections, as higher import costs could add to consumer prices. For now, the tariff threat has only been delayed, with several parts of the emerging agreement still unclear. With PTI Inputs- EndsPublished By: India Today Web Desk Published On: Aug 20, 2026 01:58 IST Also WatchUS envoy calls Kashmir important part of India. The reality Pakistan must admitSatyendar Jain, Azam Khan in ED net. 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