Trump Pauses 50% Canada Tariffs At 11th Hour, Declares "We Have A Deal"

The Canadian dollar climbed against most of its Group-of-10 peers after President Trump delayed 50% tariffs on billions of dollars of Canadian goods for three days, claiming on Truth Social that a trade deal was pending. The last-minute reprieve will ease trade tensions in North America.

"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 Joe Biden, may be awoken from the grave!" Trump wrote on Truth Social late Tuesday night.

The United States Trade Representative wrote on X, "The 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."

Congratulations Mr. President. The 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… https://t.co/YSQ4rNmKAv

— United States Trade Representative (@USTradeRep) August 19, 2026

A White House proclamation explained that the tariffs were suspended after Canada committed to removing discriminatory treatment across US automobiles, dairy products, and alcohol.

Canadian Prime Minister Mark Carney released a statement offering a more cautious view and stopped short of confirming that a final deal had been reached.

"Substantial progress has been made, although there is important work still to be done," Carney said in the statement. "While we continue this work, Canada remains focused on building a stronger, more independent, and more competitive economy at home."

Analysts at Jefferies added more color: 

Trump says U.S., Canada have trade deal, pauses new tariffs for three days Globe and Mail reported that U.S. President Donald Trump announced a tentative trade deal with Canada and paused planned 50% tariffs for three days, less than two hours before they were due to take effect. 

Trump said the agreement remains subject to final documentation and did not disclose specific terms or confirm whether the tariffs would be permanently withdrawn. 

The announcement followed intense negotiations between Canadian and U.S. officials, including multiple discussions between Prime Minister Mark Carney and Trump. 

Sources indicated negotiators believed they had developed a proposal capable of resolving the impasse, but the final decision rested with political leaders. The threatened tariffs, under Section 338, would have applied to about US$20B of Canadian exports including electronics, dairy, alcohol and wood products. Talks also covered existing Section 232 tariffs on autos, metals and forest products. 

Reports suggest the U.S. may reduce, but not fully remove, some tariffs in exchange for Canadian concessions such as lifting provincial bans on U.S. alcohol and removing certain countertariffs. 

Key sticking points remained auto and lumber tariffs, with Canada seeking exemptions for North American auto content and provinces demanding meaningful lumber relief. 

The outcome represents a significant political test for Carney, who has balanced pressure to protect Canadian interests with business demands for greater trade stability.

Scotiabank's Derek Holt provided his first take:

Great, there's a possible deal. What's in the deal? Dunno. Do I trust there is a deal because Trump said so? Not really. Do markets trust there is a deal? Not so much, as CAD only appreciated by about a quarter cent since Trump's social media post last night, CGBs are flat, and so are TSX futures. All he did was to go TACO and postpone the 50% tariffs for three days just 1¾ hours before they were to have been applied against $20 billion of imports from Canada sans CUSMA exemption. Canada's retaliation is similarly postponed. That's a positive for now, since otherwise everything would have skidded off into the ditch, but the rest is still uncertain. 

What's in the deal? Haven't a clue. Is it good for both Canada and the US? Dunno. Trump's post merely says the two countries have a deal while intimating that the Keystone XL pipeline is back on. We'll see about that, given a guarded industry toward the pipeline that has moved on given the wild unpredictability of successive US administrations, the long project timelines and the varied competing interests. 

We also have this post from the USTR that claims "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." We'll be the judge of that, not the White House.

Canadian PM Carney's post was much more measured. It noted that "substantial progress has been made, although there is important work still to be done." On that count, massive shout-outs to the Canadian team for working so tirelessly and on something so mindless as zero-sum beggar-thy-neighbour trade policies out of the US that divert precious management time by leaders and businesses away from more meaningful pursuits. You've served your country well so far.

And so we need details. What's in the agreement, what are the enforcement mechanisms, what are the timelines for implementation, and of course, how exactly comprehensive is this? Is it a meaningfully comprehensive CUSMA extension, or just the opening salvo? How much did PM Carney give away from a salability standpoint at home? The provinces will need to be briefed and their reactions and cooperation will be important. And is Trump's signature going to actually mean anything on this 'deal' given his pattern of not honouring much of what he commits to doing?

Throughout all of this I have stuck to a cautious optimist line that Canada would get a trade deal before the midterms or before the new US Congress convenes in January. The odds of this happening just went up. That has been part of a macro narrative for improved growth and modest tightening by the Bank of Canada as the case for last Fall's insurance cuts to persist would be removed at a minimum. I hope that's true, but I'll jump on the 'Let's Make a Deal' stage when I see something meaningful. Until then, post on to your heart's content, we want details!! 

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. It would buoy market and business sentiment toward Canada. It could put at ease consumer worries. 

And be wary toward the possible confirmation bias in gloomier quarters. I wouldn't want talk to see some of the research gloomsters who were adopting a negative stance on trade and how damaging it could be to Canada's economy and markets while making rate cuts more likely then turn around and say a deal doesn't mean much. Nothing to see here. Don't want to see it because it goes against all of their other views that deliberately excluded the cautious optimists. #accountability. The BoC wouldn't dismiss a deal; amid multiple uncertainties, removing or materially dropping trade uncertainty would be another step toward modest tightening.

Trump's announcement signals possible progress ahead of the review of the North American trade agreement between the US, Canada and Mexico. The US and Canada traded $900 billion in goods and services last year.