WASHINGTON (AP) – President Donald Trump announced on Tuesday that he would postpone the 50% tariffs on $20 billion worth of Canadian imports after both nations reached a last-minute agreement just two hours before the sanctions were set to take effect.
This announcement, made via Trump’s social media platform, allows for additional negotiations and temporarily eases the tensions between these long-time allies.
“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!” Trump posted on Truth Social.
If implemented as planned at 12:01 a. m. Wednesday, Trump’s import taxes would have affected Canadian products such as hockey sticks and tongue depressors.
However, the political fallout might have been more significant than the economic impact. Canada had warned it would retaliate against any new tariffs with its own levies, escalating a trade dispute between countries that traded $880 billion worth of goods and services last year.
A proclamation from the White House stated that Canada had shown willingness to eliminate measures deemed discriminatory against U. S. exports of alcohol, dairy, and motor vehicles. Canada did not immediately verify these commitments.
Canadian Prime Minister Mark Carney said in a statement “substantial progress” had been achieved but emphasized that critical work remained; confirming that Canada agreed to the three-day delay while discussions continued.
: U. S. and Canada hold last-minute negotiations to prevent Trump’s 50% tariffs
Carney and Trump spoke twice over the phone in recent days about ongoing negotiations, including one call Tuesday afternoon according to Carney’s office, highlighting this urgent effort for an agreement.
Both nations had reasons to back away from an escalation. Nearly 72% of Canada’s goods exports went to the United States last year. Additionally, imposing hefty new tariffs would pose risks for Trump’s administration ahead of November’s midterm elections when many voters are already feeling burdened by rising living costs.
“I don’t think either side really wants these tariffs to come into effect,” Ryan Majerus, a partner at King & Spalding and a former U. S. trade official, mentioned before the announcement of delay was made public. “There’s a pretty strong push on both sides to find an off-ramp here.”
Canadian Chamber of Commerce President and CEO Candace Laing stated in a release that while the three-day tariff pause gave businesses some relief, it lacked the certainty that a signed interim agreement would ensure.
“This limbo state is not anyone’s preferred outcome,” she remarked while urging negotiators to reach an agreement swiftly.
Trump’s strategy regarding Canada marks a stark change from what has traditionally been cooperative relations between both nations. He has imposed tariffs on Canadian goods in efforts aimed at bringing manufacturing back home while making provocative comments about turning Canada into America’s 51st state.
: Carney says U. S. trade talks are ‘nasty’ after Trump criticizes Canada’s leadership
Tariffs have become central to Trump’s economic plans for his second term. Last year he placed double-digit import taxes on nearly every country citing America’s longstanding trade deficit as justification for what he termed national emergency measures. The Supreme Court ruled earlier this year that he’d exceeded his authority leading those tariffs being struck down which means refunds must be paid back to importers by federal government now.
This has prompted Trump searching for alternative legal grounds for implementing tariffs.
To target Canada specifically he referenced legislation dating back nearly one hundred years from Great Depression era using Section 338 of Tariff Act of 1930 threatening up-to-50% tariffs affecting around 5%of Canadian exports heading towards United States market.
Ninety-three years ago when economies crumbled globally Congress enacted this law imposing taxation across international borders known famously as Smoot-Hawley Tariffs , often cited by historians/economists alike due its contribution worsening economic situation during great depression.
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