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U.S. President Donald Trump’s pause on his proposed 50 per cent tariffs against Canada brings “relief” for businesses, but the uncertainty over the trade relationship continues, some industry groups said.
“Let’s be clear: the tariff delay provides relief on both sides of the border. Businesses may not be closing up shop with this news, but an extension doesn’t bring the certainty that a signed interim deal would,” said Candaice Lang, president and CEO of the Canadian Chamber of Commerce in a statement.
With less than two hours to go before the deadline for his new tariffs, Trump took to his preferred social media platform Truth Social on Tuesday night to announce that the levies had been paused since a deal could be on the table.
“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 wrote in his post.
Prime Minister Mark Carney did not mention a deal on the table but added that Canada and the United States had made “substantial progress” in trade negotiations, but “important work still needs to be done.”
Washington had agreed to pause the tariffs until Friday while talks continue, Carney said.
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Canadian businesses need stability, Lang said.
“We know that stability is in short supply and businesses will take any ounce they can get. This limbo state is not anyone’s preferred outcome — time is of the essence,” she said.
A key trade irritant for the U.S. is the provincial boycott on American liquor, which the Distilled Spirits Council of the United States says has caused exports of American spirits to drop by more than 70 per cent.
“As discussions continue over the next few days, we encourage leaders on both sides of the border to reach a negotiated solution that gets American spirits back on retail shelves in all Canadian provinces and returns the spirits sector to a zero-for-zero tariff framework,” said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, after Trump’s announcement.
The odds of securing a comprehensive trade deal before the U.S. midterm elections in November went up after Tuesday’s developments, said Scotiabank economist Derek Holt.
“If a deal that extends CUSMA and lowers uncertainty in a meaningful way were to be achieved, then it would be positive for Canadian economic growth and negligible for US growth,” Holt said in a note.
“It would buoy market and business sentiment toward Canada. It could put at ease consumer worries,” he added.
The Canadian dollar appreciated slightly against the U.S. dollar following Trump’s announcement.
Following Trump’s social media post, U.S. Trade Representative Jamieson Greer said in a statement that the trade deal “will include comprehensive market access for all American goods, economic security commitments, digital trade alignment, and many important provisions that will continue to protect our market and American workers, along with our Canadian partners.”
Trump also revived talk of the Keystone XL oil pipeline, which was shelved after a 2021 executive order from then-U.S. President Joe Biden.
“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” Trump said, later posting an AI-generated image of him pulling the pipeline out of a grave.
The pause came after Trump and Carney spoke over the phone on Tuesday afternoon, and Greer met with Canada-U.S. Trade Minister Dominic LeBlanc and chief negotiator Janice Charette, who are leading Canada’s trade efforts in Washington.
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