Trump Pauses 50% Canada Tariffs for Three Days After Last-Minute Deal

President Trump announced hours before a midnight deadline that he would pause threatened 50% tariffs on approximately $20 billion worth of Canadian imports for three days, through August 21, citing a deal that still requires final documentation. The levies, which would have affected about 5% of Canadian exports to the United States, were put on hold after a day of intensive negotiations in Washington and a direct call between Trump and Canadian Prime Minister Mark Carney. Canadian and U.S. negotiators met repeatedly ahead of the deadline, with the auto sector emerging as the central sticking point: Canada sought a delay and relief from existing tariffs on autos and steel, while the Trump administration demanded Canada drop retaliatory measures, end alcohol boycotts, and open its dairy market to greater U.S. access.

Carney's office said talks had made substantial progress but that more work was needed. Trump also mentioned the Keystone XL pipeline could be resurrected as part of broader discussions. The Canadian dollar had weakened during the day as traders assessed the odds of a deal at roughly a coin flip or worse, with USD/CAD trading near 1.3897, but the U.S. dollar slipped about 0.2% against the Canadian dollar to 1.3877 immediately after Trump's announcement.

The three-day window keeps pressure on both sides to finalize written terms before new tariffs can be reimposed.