S. President Donald Trump has paused a threatened 50% tariff on Canadian goods just hours before it was due to take effect, according to announcements made Tuesday evening. The tariff, which would have affected $20 billion worth of Canadian exports including cars, alcohol, and dairy products, was suspended for three days, as Trump posted on social media that Canada and the United States had reached a deal "subject to the finalization of documents."
Canadian Prime Minister Mark Carney said "substantial progress" had been made toward a trade deal but that more work was needed. The reprieve comes after a contentious year for the two countries, with relations strained by tit-for-tat tariffs and online exchanges in which Trump has mused about turning Canada into a S. state.
In February 2025, the White House imposed a 25% tariff on Canadian goods, citing inadequate progress in curbing cross-border illegal immigration and drug trafficking. Canada responded with a reciprocal levy, calling the S. actions "unwarranted and unreasonable." Canadian officials maintained that they had implemented a robust border protection plan and that less than 1% of fentanyl and illegal crossings originated from Canada.
In his social media post, Trump also said the controversial Keystone XL pipeline project "may be awoken from the grave," without giving further details or indicating whether it was linked to the tariff agreement. Keystone XL, proposed in 2008 to transport oil from Canada's western tar sands to S. refiners, was halted in 2021 by owner TC Energy after President Joe Biden revoked a key permit for the 1,200-mile project. The pipeline had been a flashpoint in -Canada relations, facing opposition from environmentalists, Native American tribes, and S. landowners.
TC Energy, which incurred significant losses after the cancellation, shifted its focus to natural gas. However, the company has since proposed a new pipeline, Prairie Connector, which would carry 550,000 barrels per day from Alberta to Wyoming using some existing Keystone XL infrastructure. The project's progress is expected to be decided in 2027, contingent on the stability of the necessary S. presidential permit. The revival of the pipeline was discussed during trade talks between Trump and Carney, where it was proposed as a potential area of collaboration.
The tariff pause marks a temporary easing of tensions between the two countries, which have historically been strong trading partners, with bilateral trade estimated at roughly $909 billion in 2024, according to the Office of the S. Trade Representative.