Trump pauses 50% Canada tariffs after 'DEAL' on Keystone XL, trade talks

President Donald Trump announced late Tuesday that he has paused the 50 percent tariffs on Canadian goods scheduled to take effect Wednesday morning, citing a tentative agreement that could revive the Keystone XL pipeline.

“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.

The three-day pause gives negotiators additional time to finalize terms. The tariffs would have targeted US$20 billion worth of Canadian goods, including cement and hockey sticks.

What does this mean for Iowa?

Iowa farmers and manufacturers have watched the negotiations closely. U.S. Sen. Chuck Grassley of Iowa said Trump's threat should serve as a “wake-up call to Canada to make some changes.”

“I think the president is probably using them as a lever,” Grassley said Friday in an interview at the Iowa State Fair in Des Moines.

While Grassley has been a key backer of Trump's agenda, he has continued to voice support for free trade despite the president's growing tariff regimen. He said there's nothing wrong with tough negotiations but added, “These negotiations cannot be used as a way of destroying” the trilateral trade agreement known as CUSMA.

Carney, Trump hold second call in two days

Prime Minister Mark Carney and Trump spoke Tuesday afternoon, hours ahead of the original deadline. According to the Prime Minister's Office, the leaders “spoke again this afternoon about the ongoing negotiations.”

No further details were released. Tuesday's conversation marked the second time the two leaders spoke in as many days.

U.S. farmers key to Trump's decision

CTV News U.S. political analyst Eric Ham said Trump's final decision remains uncertain as he evaluates mounting economic pressure and political risks, including rising inflation and fuel prices.

Ham highlighted that “a key constituency that the president listens to is farmers,” warning that proposed tariffs could have a “debilitating” effect on them. New polls show Democrats are poised to potentially retake control of the U.S. Congress, with surging support in key areas like Iowa, making the electoral risks of the trade policy a major concern for the GOP.

What goods face potential tariffs?

The tariffs that could hit Canada are grouped by three executive orders loosely themed around motor vehicles, dairy and alcohol. The content of each list is broader than those themes:

• The dairy order: Milk and cream, whey and milk protein concentrates, casein, lactose, sugars and cane molasses, non-alcoholic beer, essential oils of peppermint.
• The alcohol order: Beer, wine, liquor, cider, essential oils of grapefruit, wooden furniture, ice hockey and field hockey equipment other than balls and skates.
• The motor vehicles order: Natural honey, down feathers, tulips and other flower buds, live orchids, vegetable and tree seeds, perfumes containing alcohol, motorcycles with engines of 800 cc or greater, and more.

U.S. Chamber of Commerce warns of economic damage

The U.S. Chamber of Commerce urged both countries to reach a deal avoiding new tariffs.

“The introduction of 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 U.S.-Mexico-Canada Trade Agreement,” said Neil Herrington, senior vice-president for the Americas.

Herrington added that a deal reducing tariffs on Canadian steel, aluminum, lumber and auto components while returning U.S. wine and spirits to Canadian shelves “would be a boon to U.S. consumers, producers, farmers and manufacturers.”

Negotiators haggling over vehicle tariffs

U.S. and Canadian officials are negotiating potential reductions of American tariffs on Canadian vehicles, according to Reuters sources. Canadian negotiators want vehicle tariffs dropped from the current 25 percent to 15 percent.

A sticking point remains: the U.S. wants tariff reductions based on the amount of American content in Canada-made vehicles, while Canadian negotiators want all North American parts eligible, including content from Canada and Mexico.

What happens next?

The three-day pause gives both sides until the end of the week to finalize a deal. Analysts remain split on whether Trump will ultimately follow through with tariffs or continue negotiating.

Political analyst Jeffrey Bloodworth of Gannon University suggested Trump is bluffing. “He is bluffing and is going to pull back,” Bloodworth said.

Former senior White House trade adviser Kelly Ann Shaw said the fact negotiations are still underway is “promising.” She noted that “the hardest issues always get resolved at the very last moment.”

Will the Keystone XL pipeline be revived?

Trump's statement suggests the pipeline, killed by the Biden administration in 2021, could be part of the deal. The project would carry Canadian crude oil through the United States, including potentially through the Midwest.

Details on the pipeline's revival remain unclear, but the announcement marks a significant shift in the trade talks.

This is a developing story. More updates to follow.