Tariff Delay Announced as Sides Near Agreement

Less than two hours before new U.S. tariffs were set to hit Canadian goods, President Donald Trump announced a three-day pause, citing a breakthrough in talks. In a social media post, Trump stated, "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!" The tariffs, which would have applied a 50% levy on nearly $20bn (C$28bn) of Canadian imports, were averted at the last minute, according to a BBC report.

The development marks a significant step in a tense period between the two countries, which have been at odds over trade issues since Trump returned to office. The latest round of tariffs was scheduled to target a range of Canadian goods, including wine, dairy, cement, clothing, and hockey equipment. These were to be in addition to existing U.S. tariffs on Canadian steel and aluminium, autos, and lumber.

Keystone XL Emerges as Possible Part of a Deal

Central to the emerging agreement is the potential revival of the Keystone XL pipeline, a project with a long and contested history. Trump, in his social media post, suggested that the final trade deal could allow the project to move forward. He wrote, "The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!" The post was accompanied by an AI-generated image of Trump pulling the pipeline from a grave marked "BURIED BY BIDEN."

According to CP24, the pipeline, first proposed in 2008 by TC Energy Corp. and ConocoPhilips (then TransCanada Corp.), has been a flashpoint for over a decade. The project would have carried Canadian crude oil to the U.S. Gulf Coast, potentially increasing exports by more than 12 per cent. The current Keystone pipeline, built between 2008 and 2010, runs from Hardisty, Alta., across Saskatchewan and Manitoba, crossing into the U.S. near Haskett, Man.

A Rocky History of Approvals and Cancellations

The Keystone XL project's history has been marked by repeated reversals. The Canadian Energy Board approved the project in 2010 with 22 conditions, but it was later shut down by the Obama administration in January 2012. Trump vowed to revive it during his 2016 campaign and signed an executive order in January 2017. Construction began in April 2020, only to be cancelled by the Biden administration in January 2021, which cited economic and environmental objectives. Former Canadian Prime Minister Justin Trudeau expressed disappointment at the cancellation, while then-Alberta premier Jason Kenney threatened legal action.

In February 2025, Trump posted about reviving the project, and in October, Prime Minister Mark Carney pitched it to Trump in exchange for tariff relief, according to CP24. Alberta Liberal MP Corey Hogan confirmed to CP24 that the pipeline was being used as leverage in trade talks. CTV News political analyst Eric Ham noted to CP24 that the pipeline could be a 'sticking point' for Trump, who has prioritized oil and energy in negotiations.

Negotiations on Tariffs and Market Access

A key point of contention has been the U.S. demand for greater market access for its goods. According to a BBC report, the U.S. has been pushing Canada to remove retaliatory tariffs on American autos and adjust dairy quotas to allow more US cheese producers access. The U.S. also wants Canada to lift a ban on American alcohol sales imposed by most Canadian provinces.

As reported by BBC, citing a Reuters report, negotiators were discussing a deal to reduce U.S. tariffs on Canadian autos from 25% to 15%. However, the two countries could not agree on which vehicles would be eligible, with the U.S. pushing for the reduction to apply only to cars with high American content. Carney will need the support of provincial premiers to reinstate alcohol sales, as Ontario Premier Doug Ford indicated he was open to lifting the ban only if a 'fair deal' is reached.

Business groups have welcomed the tariff pause. The U.S. Chamber of Commerce urged both sides to reach an agreement, warning that higher tariffs would damage both economies and risk 13 million American jobs dependent on U.S.-Canada trade.

Prime Minister Carney acknowledged progress in a statement, saying, "Substantial progress has been made, although there is important work still to be done."