NEW YORK, August 20, 2026– Canadian exporters went to bed last night bracing for tariffs invoked under a never-before-used provision of the 1930 Tariff Act, one that allows duties as high as 50%, only to see those tariffs reversed just in time. U.S. President Donald Trump made the announcement late last night, just a few hours before midnight, that he was placing a 50% tariff on about $20 billion worth of Canadian imports for three days due to a “tentative” deal.
“I have paused the 50% Tariffs against Canada… based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL,” Trump wrote on Truth Social. Canadian Prime Minister Mark Carney confirmed a pause was in effect but cautioned that “important work” remained, while U.S. Trade Representative Jamieson Greer’s office described the emerging framework as a broader market-access agreement rather than a narrow tariff fix.
What triggered the crisis
The duties, which were raised based on the seldom-used provisions of the 1930 Tariff Act, were imposed on Canadian cars, dairy, and alcohol due to their discriminatory trade practices. The emerging bilateral framework aims to address trade impasses and could reduce current U.S. tariffs on Canadian steel and aluminium in half to approximately 25%, though terms governing metal derivatives remain under active consideration. The talks that have been going on for several weeks have stalled several times due to Canada’s rules for its automotive industry and its policies towards American wine and spirits.
Why “certainty” may not be coming back
However, trade experts warn that even with the agreement, Canadian companies will not regain the duty-free access they had before 2025. Mahmood Nanji, fellow at the Ivey Business School at Western University, claims that the U.S. government sees tariffs as a “permanent market access fee” rather than a temporary inconvenience. Nanji puts the average American tariff on Canadian products at about 3% currently, with most goods passing through duty-free, an advantage he expects any new agreement to erode, at least partially, for the remainder of Trump’s presidency.
The economic toll is already visible
The uncertainty has its effect on job creation. According to Statistics Canada statistics quoted by trade experts, Canada’s private sector has lost about 112,000 jobs in the first four months of 2026, apart from thousands of public sector jobs that were lost. In a report commissioned by the Canadian American Business Council, a full-blown failure of the USMCA agreement will result in the loss of over 100,000 jobs for Canada, while success of the negotiation process will lead to positive job creation. In a separate study carried out by the Canadian Federation of Independent Business of over 1,800 small exporters, most companies were found to be stopping hiring and investments just to keep themselves alive.
The agreement is in limbo; it did not get renewed by July’s deadline and has now begun annual review cycles with an absolute expiry date of 2036 without renewal of a new pact. According to Capital Economics, failure of this Canada deal may result in more tariff escalations and delays in negotiating the USMCA. As such, companies from both countries have no choice but to grapple with deadlines for paperwork, changes in duty rates, and three days of countdown, which can lead to further disruptions if the deadline passes.
In general, analysts agree on one aspect: even with this deal, Canadian companies should prepare for a prolonged albeit lowered tariff barrier, as well as diversification of export markets, where around two-thirds of their goods are currently sent to the US market.
