TLDR
- Trump paused 50% tariffs on Canadian goods hours before the midnight deadline after announcing a deal on Truth Social
- The tariff pause lasts three days while final documents are prepared
- Talks have centered on market access, dairy, alcohol, and auto sector concessions
- The Keystone XL pipeline was mentioned by Trump as part of the discussions
- Only about 5% of Canadian goods imported by the US would have faced new duties
President Trump announced late Tuesday that he was pausing 50% tariffs on Canadian goods, just hours before they were set to take effect at midnight. He posted the news on Truth Social, saying the two countries had reached a deal, subject to finalizing documents.
"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! The great Keystone XL Pipeline, long ago killed by Sleepy… pic.twitter.com/u5xEHMKPaW
— The White House (@WhiteHouse) August 19, 2026
The tariffs had been scheduled to hit $20 billion worth of Canadian goods, including cement and hockey sticks. The pause gives both sides three days to finalize terms.
What Led to the Last-Minute Pause
Trump first announced plans for the 50% tariffs last month, citing what the US called discriminatory trade practices by Canada. The targeted areas included automobiles, dairy products, and alcohol.
The tariffs were set to be imposed using Section 338 of the Tariff Act of 1930, a rarely used law that allows the US to retaliate against countries with discriminatory trade policies. Trump had to use this tool after the Supreme Court struck down the emergency powers he had previously used for sweeping global tariffs.
Canadian Prime Minister Mark Carney confirmed the pause, saying “substantial progress has been made, although there is important work still to be done.” He described the talks earlier this week as “very intense and delicate.”
What Is Still Being Negotiated
Talks have focused on several areas. Canada has been pushing for the US to lift existing duties on cars, steel, and lumber. The US has been demanding broader market access, including the return of American wine and spirits to Canadian store shelves.
US Trade Representative Jamieson Greer said any deal would include “comprehensive market access for all American goods, economic security commitments, and digital trade alignment.” He acknowledged earlier that “there are a lot of issues.”
The auto sector remains a key sticking point, according to people familiar with the talks. Canada’s car industry has already faced factory closures and job losses due to earlier tariffs.
An analysis by Veda Partners found that the new tariffs would have raised the average tariff rate on Canadian exports to the US from 4.68% to 6.27%. In practice, only about 5% of Canadian goods imported by the US last year would have faced new duties.
Trump also mentioned the Keystone XL pipeline in his Truth Social post, suggesting it could be revived as part of a broader agreement. The pipeline, which would carry 830,000 barrels per day from Alberta to the Gulf Coast, was canceled by President Biden in 2021.
The Canadian Chamber of Commerce welcomed the pause but said it does not replace the need for a signed deal. “An extension doesn’t bring the certainty that a signed interim deal would,” said Chamber president Candace Laing.
The outcome of these talks could also shape the future of the US-Mexico-Canada Trade Agreement, which is up for renewal.
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