Trump says US and Canada have a trade deal, but key terms remain unclear

WASHINGTON (AP) — Canada has dodged President Donald Trump’s threat of 50% tariffs — at least for now.

Trump went on social media late Tuesday to say he was pausing for three days the taxes on $20 billion worth of Canadian imports less than two hours before they were set to go into effect.

Speaking to reporters at the White House Wednesday, Trump said that talks with Canada yielded a “very fair deal for both” sides. “Our farmers are going to be thrilled, our manufacturers are going to be thrilled,” Trump said in an impromptu gaggle during a tour of South Lawn construction.

Trump also noted that the agreement is all subject to the “finalization of documents.” For now, the tariffs have been postponed until 12:01 a.m. Saturday.

Dominic LeBlanc, the minister responsible for Canada-U.S. trade, returned to Ottawa on Wednesday to meet Canadian Prime Minister Mark Carney, who was also set to chair Cabinet and a virtual meeting with provincial and territorial leaders.

Here’s what to know:

Trump’s tariff threat would hit 5% of Canadian exports

Last month, Trump invoked a never-before-used legal authority, dating back to the Great Depression, to announce that the United States would slap 50% tariffs on $20 billion, or about 5%, of Canadian exports to the United States, ranging from hockey sticks to tongue depressors.

Trump claimed that Canada discriminates against American exports of autos, alcohol and cheese. The U.S. president is also furious that Canada and China were the only countries that punched back with retaliatory tariffs of their own when he slapped levies on their products.

The United States and Canada have sparred for decades over trade, poking each other over sore spots like Canadian softwood lumber imports and U.S. access to Canada’s protected dairy market.

Canada’s dairy market has been a persistent irritant

While details of the agreement emerging Wednesday remain vague, Trump claimed that Canada had agreed to end tariffs on U.S. agricultural products. “The tariffs will be non-existent for our farmers. Our farmers were paying tremendous tariffs into Canada, and those tariffs are going to be totally eviscerated. Down to zero,” he said.

Canada currently allows a set amount of dairy imports at low tariffs. Once imports exceed that limit, much higher tariffs apply. The U.S. says Canada’s “supply management″ system makes it harder for American dairy producers to get full access to the Canadian market.

LeBlanc, talking to reporters in Washington, said that Canada’s “agriculture sector will be well protected and we have maintained our tough line.’’

That leaves another key question unresolved: how Canada can preserve supply management while giving U.S. farmers the additional access Trump says they will get.

Also unclear is what Canada would get out of the deal. Carney says the emerging agreement would provide greater certainty and preserve favorable terms for key sectors, but Ottawa has not detailed what tariff relief Washington has offered.

Trump raised the prospect of reviving Keystone XL

In the Truth Social post announcing the three-day tariff pause, Trump declared that the long-canceled Keystone XL pipeline “may be awoken from the grave.” He posted an illustration of himself wrangling with a pipeline. He did not say whether reviving Keystone XL was part of the agreement.

The White House did not return a request for more details on the Keystone element. But earlier this year, Trump granted a key approval for a major new Canada-to-U.S. pipeline nicknamed “Keystone Light.” It would carry up to 550,000 barrels (87,400 cubic meters) of oil a day from Canada through Montana and Wyoming, where it would link with another pipeline.

Keystone XL was designed to carry up to 830,000 barrels of crude a day from Canada’s oil sands to Nebraska and onward to U.S. Gulf Coast refineries. The project became a major political and environmental fight: President Barack Obama rejected it in 2015, Trump revived it in his first term and President Joe Biden canceled its permit in 2021. The Canadian company behind it later abandoned the project.

Carney had already raised reviving Keystone XL with Trump at the White House in October 2025, and Trump was receptive, according to a Canadian government official familiar with the discussion. A revival would align with a longstanding Canadian goal rather than amount to a new U.S. concession.

Carney did not mention the pipeline in his latest statement or detail what Canada had agreed to in the broader trade talks.

Both sides wrangle over American alcohol imports

Eight of Canada’s 10 provinces restrict or ban U.S. alcohol — measures imposed in retaliation for Trump’s previous tariffs on a number of Canadian goods last year and amid anger over his repeated talk of making Canada the 51st U.S. state. The Distilled Spirits Council says U.S. spirits exports to Canada have fallen more than 70%.

Ontario, Canada’s most populous province, is especially important. Its government-run LCBO, one of the world’s largest alcohol purchasers, sold nearly $1 billion Canadian dollars ($723 million) in U.S. products annually before pulling them from shelves.

The White House says the emerging deal includes a Canadian commitment to address the restrictions. But Carney cannot order provinces to restore sales. And provincial leaders could resist if the broader deal falls short of their priorities. For instance, Quebec is focused on dairy supply management, Ontario on protecting its auto industry and British Columbia on softwood lumber.

The backlash extends beyond liquor stores, with Canadian travel to the United States falling sharply. Even if U.S. alcohol returns, sales could take time to recover.

An agreement could clear the way for a broader trade deal

The U.S. is renegotiating a North American trade pact — the US-Mexico-Canada Agreement — that Trump strong-armed America’s neighbors into accepting in his first term. The U.S. has begun formal USMCA negotiations with Mexico but not with Canada.

If the threat of 50% tariffs is cleared, it “should help pave the way for formal U.S.-Canada negotiations,” said Wendy Cutler, a former U.S. trade negotiator who is now senior vice president the Asia Society Policy Institute.

Both countries had incentives to head off an escalation in trade tensions.

Nearly 72% of Canada’s goods exports last year went to the United States. And the Trump administration might be wary of imposing a hefty new tariff — paid by U.S. importers who try to pass along the cost to consumers via higher prices — ahead of November’s midterm elections. American voters are already frustrated with the high cost of living.

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Gillies reported from Toronto.

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