THE GIST
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Washington is buying time before it can cut a deal with Canada for slashing tariffs on a range of goods. In true Trumpian style, the terms are still tentative. And the pause came two hours before a threatened 50% levy on Canadian goods was to take effect.
WHAT HAPPENED
President Trump's proposed 50% tariffs were supposed to hit a range of Canadian goods, from hockey sticks to tongue depressors at midnight on Wednesday. But a deal was struck to buy time until Saturday to negotiate terms for a comprehensive trade deal.
The emerging terms would lower the top-line steel and aluminum tariff to 25% from 50%, with specific conditions applied: The reduced rate of 25% would apply to an annual quota, likely around 4 million metric tons of steel. Volumes above that threshold will still face a 50% rate. And derivative products containing steel or aluminum could carry different rates altogether.
On autos, the proposal is to cut top-line tariff rates on Canadian-built cars and trucks to 15% from the existing 25%. Canada is pushing to further reduce it to 10%. The 15% tariff also would be applied before deductions for the value of the U.S.-produced content, effectively bringing the rate even lower.
In exchange, The White House declared that Canada committed to removing measures Washington considers discriminatory against U.S. alcohol, dairy and motor vehicle exports. Ottawa hasn't confirmed this yet.
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A poll showed on Wednesday that the majority of Canadians want Prime Minister Mark Carney to make no further concessions to the U.S., but a lot is at stake here.
U.S.-Canada trade in goods and services totaled $880 billion last year, and nearly 72% of Canada's goods exports go to the U.S. But despite the risk, Ottawa retaliated, and threatened its own levies on any new 50% tariff.
But the cost of that would be borne by Trump. Higher import taxes ahead of November's midterms when U.S. consumers already squeezed by living costs are political suicide.
WHAT'S NEXT
Negotiators have until Friday to finalize documents before the three-day pause lapses and the 50% tariff threat resumes. Canadian officials are still unsure if the bought time will result in a favorable outcome. Whether Ottawa formally confirms the alcohol, dairy and auto concessions, and how the steel quota is structured, will determine whether this week's framework holds past the deadline.
