The United States and Canada have reached a last-minute agreement to postpone high tariffs on billions of dollars worth of Canadian goods, providing temporary respite for exporters worried about a renewed trade war between the trading partners.
US President Donald Trump made the announcement just before the 50% tariffs went into effect at midnight.
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Canadian Prime Minister Mark Carney confirmed shortly afterwards that the US had agreed to suspend tariffs until August 22nd.
The 11th-hour breakthrough came after Mr. Trump and Mr. Carney held talks on Tuesday aimed at finding common ground after weeks of stalled trade negotiations.
The tariffs will apply to about $20.2 billion worth of Canadian exports, affecting a wide range of goods from electronics and industrial machinery to furniture, dairy products and wine.
President Trump said in a post on Truth Social on Tuesday that the two sides agreed to suspend tariffs for three days after reaching an agreement “conditional on the completion of documentation.”
Neither Trump nor Carney provided details of the agreement, but the US president appears to be linking the breakthrough to efforts to revive the Keystone XL pipeline.
The Keystone XL pipeline, which has faced strong opposition and repeated delays since it was first proposed in 2008, would transport about 830,000 barrels of crude oil daily between Alberta, Canada, and Nebraska, US.
Former US President Joe Biden revoked key permits for the US pipeline extension in 2021 on environmental and economic grounds, effectively canceling the project.
“The great Keystone XL pipeline, killed by Sleepy Joe Biden long ago, may rise from the grave!” President Trump said in a social media post.
Secretary Carney said that while “substantial progress” had been made in negotiations, “significant work remains to be done.”
“As we continue this work, Canada remains focused on building a stronger, more independent and more competitive economy at home,” Carney said in a statement provided by his office.
Andreas Schotter, a professor of international business at Ivey Business School in London, Ont., said that although the announcement contained few specifics, the inclusion of the Keystone XL pipeline in the negotiations appeared to be an attempt to play to President Trump’s ego.
“It was not for the benefit of oil shipping, but because it was President Biden who actually stopped oil shipping, and this, among other things, was the one who most pushed many of the big red ‘ego’ buttons against President Trump,” Shotter told Al Jazeera.
“Let’s see if we actually reach an agreement by Friday or if we’re back to a Groundhog Day moment,” Shotter said.
The suspension of tariffs would be welcome relief for Canadian exporters, who rely on U.S. consumers more than any other market.
About 70 percent of Canada’s exports go to the United States, and the United States sends about 30 percent of its exports to Canada.
President Trump announced last month that he was invoking Section 338 of the Tariff Act of 1930 for the first time to impose tariffs in response to Ottawa’s “discriminatory treatment” of U.S. automobiles, dairy products and alcoholic beverages.
President Trump has announced a number of punitive trade actions against Canada since retaking the White House, but his latest tariff proposal is notable because it applies to goods eligible for duty-free treatment under the U.S.-Mexico-Canada Agreement.
The carve-out of the tripartite agreement, ratified during the first Trump administration, has previously allowed the majority of U.S.-Canada trade to remain tariff-free.
Canadian officials spent weeks in Washington trying to persuade the Trump administration to lift tariffs in exchange for trade concessions.
Mr. Carney has openly acknowledged the difficult nature of the negotiations, variously describing them as “messy,” “delicate,” and “intense.”
Ottawa’s efforts are complicated by the need to bring each province in the country into some kind of agreement.
Eight of Canada’s 10 provinces have banned the sale of American-made alcoholic beverages since early last year in retaliation for President Trump’s trade binge, which the U.S. government cited as the basis for the new tariffs.
Canadian provincial leaders have also expressed reluctance to make concessions on the country’s supply management system, another of the Trump administration’s pet peeves, which sets production and import quotas for dairy products, eggs and poultry.
Carney also faces a worsening public mood in its southern neighbor.
A Nanos Research poll conducted in July found that 69 per cent of Canadians said they were unlikely to buy American-made alcohol even if authorities lifted the ban.
In a poll released earlier this month by the Angus Reid Institute, 48% of respondents said they had a negative impression of Americans, compared to 45% who said they had a positive impression.
Stewart Prest, a political science lecturer at the University of British Columbia, said there is a strong sense of opposition among Canadians to President Trump’s trade threats.
“The damage from new tariffs is going to be significant in certain areas. I think Canadians are aware of that and are concerned about that, but there’s also a certain sense of national pride that Mark Carney and the prime minister have to keep in mind as well,” Presto told Al Jazeera.
“The majority of Canadians want our sovereignty to be protected and are not interested in trade peace at any cost.”
