US and Canada Agree to Suspend Trade Tariffs
The United States and Canada have reached a crucial agreement to avoid the imposition of high tariffs on billions of dollars’ worth of Canadian goods. The move provides relief for exporters who had feared a renewed trade war between the two neighbouring countries.
US President Donald Trump announced the agreement shortly before the 50% tariff was scheduled to take effect at midnight. Canadian Prime Minister Mark Carney confirmed that the US had agreed to suspend the tariff until 22 August.
The last-minute breakthrough resulted from intensive talks between Trump and Carney on Tuesday (18/8), following weeks of high-tension trade negotiations.
The suspended tariff would have targeted Canadian exports worth approximately $20.2 billion (around Rp318 trillion). Products at risk included a broad range of sectors, from electronics and industrial machinery to furniture, dairy products, and wine.
In a post on Truth Social on Tuesday (18/8), Trump stated that both sides had reached an agreement, though legal documents were still being finalised. “A deal has been reached, subject to finalisation of documents,” Trump said.
Although technical details of the agreement have not been fully disclosed by either leader, President Trump gave a strong indication that the negotiations relate to his efforts to revive the Keystone XL pipeline project.
The project, first proposed in 2008, was designed to transport approximately 830,000 barrels of crude oil per day from Alberta, Canada, to Nebraska in the US. It was effectively halted by former President Joe Biden in 2021 on environmental grounds.
“The great Keystone XL pipeline, which was long ago killed off by Sleepy Joe Biden, may be coming back from the dead!” Trump wrote in a social media post.
For his part, Prime Minister Mark Carney said that despite substantial progress, several important issues still needed to be resolved before 22 August. “Canada remains focused on building a stronger, more self-reliant, and more competitive economy at home,” Carney said in an official statement.
The suspension is crucial for Canada given its heavy economic dependence on the US market. Data shows that around 70% of Canadian exports are destined for the US, while only about 30% of US exports are sent to Canada.
The tension drew attention because the tariff threatened by Trump actually targeted goods that qualify for duty-free treatment under the United States-Mexico-Canada Agreement (USMCA). With the deadline extended to 22 August, both countries now have room to finalise the details of the agreement to prevent an escalation of trade conflict in North America.