A truck passes over the Peace Bridge between Canada and the U.S., in Fort Erie, Ont., on Aug. 18.COLE BURSTON/AFP/Getty Images
U.S. President Donald Trump says he has reached a trade deal with Canada, announcing a three-day “pause” on his latest round of tariffs less than two hours before they were set to take effect.
“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!” he wrote on his Truth Social platform.
Mr. Trump did not specify what was in the agreement or confirm that, if the documents were signed, he would cancel the planned levies entirely.
“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” the President added, without providing details.
The late-evening announcement capped a day and night of down-to-the-wire talks as Canadian officials sought to lessen the extent of concessions Ottawa would have to make to reach a deal.
In a statement released late Tuesday, Prime Minister Mark Carney sounded a more cautious note than the President as he confirmed the Section 338 tariffs would be delayed “until end of day” on Friday.
“Substantial progress has been made, although there is important work still to be done,” the Prime Minister said. “While we continue this work, Canada remains focused on building a stronger, more independent, and more competitive economy at home.”
Mr. Trump and Mr. Carney spoke for the second time in two days on Tuesday “about the ongoing negotiations,” the Prime Minister’s Office said earlier in the day without providing further details.
By Tuesday afternoon, Canadian negotiators believed they had arrived at a proposal with American officials that could break the impasse, a source briefed on the negotiations said. But the source cautioned that the fate of the proposal rested in the hands of Mr. Trump.
Another source said officials had taken the talks as far as they could and that it was now up to the countries’ leaders to decide whether they would strike a deal or risk triggering an all-out trade war.
New tariffs under Section 338 of the Smoot-Hawley Tariff Act were scheduled to take effect at 12:01 a.m. Wednesday. Canadian negotiators have warned the U.S. that Ottawa will be forced to retaliate if they do − something the Trump administration has said it would not tolerate.
Negotiators were also trying to reach a détente on tariffs on autos, metals and forest products imposed last year under Section 232 of the Trade Expansion Act. Two sources said the proposed agreement was being complicated by the fact that any deal on autos must also align with a separate deal the White House is trying to make with Mexico because of how integrated the sector is.
On Tuesday afternoon a third source said Canadian negotiators were much more optimistic than they had been on Monday, but the person cautioned that negotiations were continuing and remained intense.
The Globe is not identifying the sources because they were not authorized to discuss the sensitive negotiations publicly.
Canada-U.S. Trade Minister Dominic LeBlanc remains in Washington with Canada’s lead negotiator, Janice Charette.
Canadian Ambassador to the U.S. Mark Wiseman was called back to Washington on Tuesday. He was supposed to be at an event at North Carolina’s chamber of commerce but cancelled at the last minute to return to the capital, the chamber said.
The Section 338 tariffs would apply a 50-per-cent levy to US$20-billion worth of Canadian electronics, dairy, alcohol, wood and other products. The Prime Minister has said he wants a comprehensive deal that averts those new levies and addresses the longer-standing Section 232 tariffs.
Sources have told The Globe that the deal under negotiation would see the U.S. lower – but not eliminate – some Section 232 tariffs in exchange for concessions from Canada, including provinces lifting their U.S. alcohol bans and Ottawa dropping its countertariffs on autos. But the premiers have said they will only put U.S. alcohol back on store shelves if meaningful changes are made to the existing tariffs.
One of the sources who spoke with The Globe on Tuesday said that, as of the morning, the two sides remained far apart on the auto tariffs, with the U.S. holding firm to its offer to cut the levy from 25 per cent to 15 per cent.
Sources have previously told The Globe that Canada had been pressing for a carve-out for North American auto content from the 15-per-cent levy. If they secure that agreement, it would mean the effective tariff rate is much lower than 15 per cent because it would apply only to a small portion of a vehicle.
Discussions about the auto sector are more difficult because the U.S. is looking to triangulate any tariff deal with Mexico City as well, and auto proposals are being put to both Canadian and Mexican negotiating teams, the two different sources said.
Mexican Economy Secretary Marcelo Ebrard, the country’s point person for trade talks, was seen leaving the United States Trade Representative’s headquarters in Washington on Tuesday evening. He declined to comment on any closed-door talks.
Pedro Casas Alatriste, CEO of the American Chamber of Commerce of Mexico, said the U.S. has also proposed a 15-per-cent tariff on autos to Mexico. He said the Mexican government would likely be willing to accept that level if there are carve-outs for Mexican vehicles and auto parts that meet the rules of the United States-Mexico-Canada Agreement.
He said such a deal would be a “major step forward” but it remained unclear whether the Americans would agree to it.
For Canadian negotiators, another sticking point in the talks remained lumber. The issue is key for British Columbia and Premier David Eby has said he won’t put American booze back on shelves if the lumber tariffs are not lowered. In late July, he said doing otherwise would “sell out forest families for nothing.”
The Prime Minister has said he won’t “sign a bad deal,” and the public mood is firmly against more concessions to the White House. But the business community is hungry for more trade stability.
How Mr. Carney navigates that will test his leadership. The Prime Minister rode to power last year on a wave of anti-Trump anger that has not abated. He campaigned on an “elbows up” response to the White House and told voters he would not let Mr. Trump “knock us around.” In October, the Prime Minister pledged to the House of Commons that he would get an “even better deal” than the one Canada already has.
He started the year by warning against Mr. Trump’s disruption to the world order and in April described Canada’s reliance on the U.S. as a weakness, but by May he had shifted his rhetoric again. In a speech in New York, he pivoted and championed the notion that a stronger Canada would “help make America great again.”
With a report from James Bradshaw