Trump postpones 50% tariff he threatened for some Canadian goods

By Elisabeth Buchwald, CNN

(CNN) — President Donald Trump’s threat of a 50% tariff on a wide range of Canadian goods will not take effect at 12:01 a.m. ET, he announced hours before, sparing roughly $20 billion worth of imports.

“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 late Tuesday on Truth Social.

In his post, Trump referred to the Keystone XL pipeline, which he said “may be awoken from the grave!” without providing further details.

The tariffs would have covered products including dairy, alcohol and furniture — about 5% of the total value of US imports from Canada last year.

The three day postponement comes after days of meetings. Canadian Prime Minister Mark Carney and Trump spoke on Monday and Tuesday as negotiations continued, with Carney describing the talks with the Trump administration as “very delicate and intense.”

In a statement late Tuesday, Carney confirmed tariffs had been postponed until end of day, August 21. “Substantial progress has been made, although there is important work still to be done,” he said.

Trump had planned to rely on a little-known law from the 1930s that has never been used to impose tariffs in this way. The administration’s use of the law was expected to face legal challenges.

But, until a court weighs in, he would be able to apply it – as was the case with the sweeping duties the Supreme Court overturned earlier this year.

Trump specifically targeted Canada, alleging that it made it harder for the US to export dairy, cars and alcohol. Canada was also the only country besides China to retaliate against Trump’s earlier tariffs, though Carney later rolled back most of those measures.

Unlike some of the other statutes Trump has turned to after the Supreme Court struck down his sweeping tariffs earlier this year, this trade law, known as Section 338, does not appear to impose a time limit on the duties. Had the tariffs taken effect, they could have remained in place indefinitely unless Trump or a future president chose to remove them.

The potential reach was also broad. The Canadian goods targeted in the proposed tariffs extended well beyond the products at the heart of Trump’s stated grievances, covering industrial equipment, plastics, furniture, clothing and other manufactured goods.

There’s another notable difference from Trump’s recent tariffs: There are no exemptions here for goods that comply with the US-Mexico-Canada Agreement. That means even products that otherwise qualify for preferential treatment under the North American trade pact could have been included in these duties.

Carney had said earlier this year the tariffs were a “direct violation” of that trade pact and warned in July the trade dispute has “raised costs for families, particularly in the U.S.”

The US Chamber of Commerce had also warned Tuesday that higher tariffs “would damage both economies, drive up costs for U.S. families, further disrupt critical supply chains, and risk the 13 million American jobs that depend on trade” under the US-Canada-Mexico Agreement.

The tariffs may ultimately have been intended as another negotiating tactic. Canada, whose economy has already been weakened by previous rounds of tariffs, had been actively engaging with US officials as the two countries tried to resolve their broader trade dispute. With the USMCA itself up for review, Trump had another major point of leverage.

This story has been updated with additional information.

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CNN’s Rashard Rose and Stephanie Yang contributed to this report.