A Three-Day Respite: The Agreement That Averted a Trade War
In a dramatic last-minute twist, U.S. President Donald Trump announced on Tuesday, August 18, 2026, that he is pausing for three days the implementation of 50% tariffs on approximately USD 20 billion worth of Canadian imports. The decision was communicated via his Truth Social platform, less than two hours before the scheduled deadline of 12:01 a.m. Wednesday, August 19.
“I have paused the 50% tariffs against Canada, which were scheduled to go into effect tomorrow morning, for a period of three days, on the basis of the fact that Canada and the United States, subject to the finalization of the documents, have an AGREEMENT!” wrote the president. In the same message, Trump added that the Keystone XL pipeline, canceled during the Biden administration, “could be revived.”
Canadian Prime Minister Mark Carney confirmed there was a “substantial breakthrough” in the negotiations, although he warned that “there is still significant work to be done.” The announcement came after two phone conversations between Carney and Trump over the previous two days, including a call on Tuesday afternoon.
Key Points of the Negotiation
The temporary agreement gives both governments additional time to finalize the paperwork. The new tariffs would have affected a wide range of Canadian products, from hockey sticks to tongue depressors, and represented roughly 5% of Canadian exports to the United States.
According to the Associated Press, the United States is seeking that Canada purchase more military equipment, including F-35 fighter jets, participate in the “Golden Dome” missile defense system, and provide greater access to critical minerals to reduce dependence on China. On the other side, Canada wants relief on tariffs for steel, aluminum, and softwood lumber.
Automotive Sector Disagreements
One of the main points of tension is the automotive industry. Washington proposed reducing the tariff on Canadian vehicles from 25% to 15%, but Ottawa is seeking a larger cut and exemptions for North American-made content. Additionally, the U.S. is demanding that Canada remove its retaliatory tariffs on American cars, that Canadian provinces resume selling U.S. alcoholic beverages, and that import quotas for dairy products be modified.
The Legal Tool: Section 338 of 1930
To impose these new tariffs, Trump invoked Section 338 of the Tariff Act of 1930, a law passed during the Great Depression, known as the Smoot-Hawley Tariff. This provision allows the president to impose tariffs of up to 50% on goods from countries that have discriminated against American businesses, without prior investigation and with no time limit. This is the first time this tool has been used in U.S. trade history.
The measure comes after the Supreme Court in February 2026 struck down tariffs Trump had imposed under the International Emergency Economic Powers Act (IEEPA), ruling that the president had exceeded his authority. Since then, the administration has sought new legal bases, such as Section 301 of the Trade Act of 1974 for other levies.
A Context of High Tension and Public Discontent
The relationship between the two countries is going through one of its most delicate moments. A petition to expel the U.S. ambassador to Canada, Pete Hoekstra, has gathered nearly 218,000 signatures since July 21. Canadians are upset by Trump's comments about making Canada the “51st state” and by his administration's tariff strategy.
Canada relies heavily on the U.S. market: 72% of its goods exports went to the U.S. last year. The border between the two countries, the longest in the world at 5,525 miles (about 8,900 km), is crossed daily by about 330,000 people and goods worth USD 2 billion.
What Comes Next?
The three-day pause allows negotiations to continue, as both governments try to avoid an escalation that would hurt consumers and businesses. U.S. Trade Representative Jamieson Greer stated, “If a country retaliates against us, obviously we will not tolerate it,” while Canadian Minister Dominic LeBlanc simply said: “The work continues.”
Meanwhile, the United States is renegotiating the USMCA (the trade agreement that replaced NAFTA) with Canada and Mexico, and the tariff threat serves as a pressure tool in those talks. Analysts consulted by AP noted that “neither side really wants these tariffs to go into effect,” suggesting a final agreement could be near.
With information from Associated Press, EFE, El País, Infobae, Clarín, and La Nación.