President Trump announced late Tuesday that he was pausing 50% tariffs on Canadian goods just hours before they were due to take effect at midnight. In a post on Truth Social, he said the United States and Canada had reached a deal, subject to the finalization of 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"

"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 set to cover $20 billion worth of Canadian goods, including cement and hockey sticks. The three-day pause gives both sides time to finalize the terms, but it also leaves businesses on both sides of the border in a short window of uncertainty while the documents are completed.

What led to the last-minute pause

Trump first announced plans for the 50% tariffs last month, saying the United States was responding to what it described as discriminatory trade practices by Canada. The targeted sectors included automobiles, dairy products, and alcohol.

The administration had planned to impose the tariffs under Section 338 of the Tariff Act of 1930, a rarely used law that allows the United States to retaliate against countries with discriminatory trade policies. Trump turned to that statute after the Supreme Court struck down the emergency powers he had previously used for broad global tariffs.

Canadian Prime Minister Mark Carney confirmed the pause, saying that "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

Negotiations have centered on several issues. Canada has been seeking the removal of existing U.S. duties on cars, steel, and lumber. The United States has been pressing for wider market access, including the return of American wine and spirits to Canadian store shelves.

U.S. Trade Representative Jamieson Greer said any agreement would include "comprehensive market access for all American goods, economic security commitments, and digital trade alignment." He had earlier acknowledged that "there are a lot of issues."

The auto sector remains one of the main sticking points, according to people familiar with the talks. Canada’s car industry has already suffered factory closures and job losses from earlier tariffs, underscoring why the talks matter for manufacturers and suppliers that depend on cross-border trade.

An analysis by Veda Partners found that the new tariffs would have increased the average tariff rate on Canadian exports to the United States from 4.68% to 6.27%. In practical terms, only about 5% of Canadian goods imported by the United States last year would have faced new duties.

Trump also referred to the Keystone XL pipeline in his Truth Social post, suggesting it could be revived as part of a broader deal. 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 agreement. "An extension doesn’t bring the certainty that a signed interim deal would," said Chamber President Candace Laing.

The outcome of the talks could also affect the future of the U.S.-Mexico-Canada Trade Agreement, which is due for renewal.