President Trump halted planned 50% tariffs on Canadian imports just hours before they were set to take effect, announcing a three-day pause while both sides finalize what he called a deal, and teasing the resurrection of the Keystone XL pipeline.

The announcement landed Tuesday evening on Truth Social, fewer than two hours before the new duties were scheduled to hit at 12:01 a.m. Wednesday. The tariffs would have covered roughly $20 billion in Canadian products, about 5% of Canada's total annual exports to the United States, including wine, hockey sticks, and cement. Trump framed the pause as the result of all-day negotiations with Canadian Prime Minister Mark Carney, the New York Post reported.

Trump posted the core announcement alongside an AI-generated image of himself yanking a pipeline labeled "Keystone" out of the ground next to a cracked tombstone reading "Buried by Biden."

A deal, or the outline of one

Trump's Truth Social post left little ambiguity about his read of the situation.

"I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL!"

Carney was more guarded. Speaking to reporters Monday in French, the Canadian prime minister acknowledged the talks but kept the substance under wraps.

"We are negotiating. The negotiations are very intense and delicate. This is not the time to talk about negotiations in public."

That gap between Trump's confidence and Carney's caution tells its own story. Breitbart reported that Canada had offered concessions including pressuring its provinces to restore American alcohol and wine to store shelves, a signal that Ottawa was willing to move on market-access complaints the Trump administration has hammered for months. Carney, for his part, said "substantial progress has been made towards a comprehensive trade deal, but there is important work still to be done."

Ryan Majerus, a partner at King & Spalding and former U.S. trade official, told the Associated Press that neither side truly wanted the tariffs to land. "I don't think either side really wants these tariffs to come into effect," Majerus said. "There's a pretty strong push on both sides to find an off-ramp here."

Trump invoked a Depression-era statute no president had used before

The 50% tariffs were not built on the legal authority Trump had relied on in earlier rounds. After the Supreme Court struck down his use of the International Emergency Economic Powers Act for tariff purposes, the administration turned to century-old trade statutes to rebuild its tariff framework. For the Canada duties, Trump reached for Section 338 of the Tariff Act of 1930, a provision enacted at the height of the Great Depression that authorizes the president to impose tariffs of up to 50% on imports from countries that have discriminated against American businesses.

No president had previously invoked Section 338. Trump's justification: Canada discriminates against American exports of cars, alcohol, and cheese. The original tariffs were announced last month, shortly after Trump was spotted chatting with Carney at the World Cup Final between Spain and Argentina.

The two leaders also met at the G7 summit in France on June 16. But the friendly optics did not prevent Trump from moving ahead with the threat. Canada and the United States traded $880 billion in goods and services last year, making the relationship one of the largest bilateral trade flows on earth, and making any disruption to it costly for both sides.

Keystone XL: from the grave?

Trump's second Truth Social post Tuesday was arguably the bigger headline for energy markets. He wrote that "the great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave." Whether that amounts to a concrete commitment or a negotiating signal remains unclear.

The Keystone XL pipeline was first announced in 2008. It would have carried roughly 830,000 barrels, about 35 million gallons, of crude oil per day from Alberta, Canada, through approximately 1,200 miles of pipeline to Nebraska, where it would connect with existing lines feeding Gulf Coast refineries. The project stalled during the Obama administration under pressure from environmental activists.

Trump revived it near the end of his first term. Then-President Biden canceled a crucial border-crossing permit in January 2021, and Calgary-based TC Energy formally abandoned the project six months later, in July 2021. The administration's broader push to renegotiate the USMCA trade pact with both Mexico and Canada has given the White House additional leverage to press for energy concessions.

Reviving Keystone XL would require more than a presidential post. TC Energy would need to recommit capital. Environmental litigation would almost certainly follow. But the fact that Trump floated it in the same breath as a tariff deal suggests the pipeline may be part of whatever package is being finalized, or at least that the White House wants Ottawa to think so.

Canada threatened retaliation, and has followed through before

Ottawa had warned it would respond to the new tariffs with retaliatory levies of its own. That threat carried weight. Canada was one of only two countries, the other being China, to actually impose retaliatory tariffs in response to Trump's earlier "Liberation Day" levies. The administration has won key legal battles keeping its replacement tariffs in effect, but a fresh round of Canadian counter-tariffs would have added new friction to the bilateral relationship.

Public sentiment in Canada has also hardened. A petition to expel U.S. Ambassador Pete Hoekstra, a former Michigan congressman and Trump ally, collected nearly 218,000 signatures since launching on July 21. The Washington Examiner noted that Trump had originally announced the tariffs in July, invoking the Depression-era provision and citing Canadian trade discrimination against American commerce.

Whether the Canadian government takes any formal action on the Hoekstra petition is another matter. But the signature count reflects the degree to which the tariff standoff has become a domestic political issue north of the border, one that constrains Carney's ability to appear too accommodating.

Three days to close, or to stall

The three-day window is short. Trump's post described the deal as "subject to the finalization of documents," which could mean anything from a near-complete agreement awaiting legal review to a framework still missing key provisions. The administration has used executive orders to move quickly on policy priorities before, but a bilateral trade agreement typically involves layers of review on both sides.

What the specific terms of the deal look like, beyond the reported concessions on alcohol and dairy market access, has not been disclosed by either government. Carney's Monday comments suggest the Canadians view the talks as still fluid. Trump's post suggests he views them as essentially done.

The Fox News report on an earlier round of tariff negotiations noted that Canada had previously committed $1.3 billion to a border security plan and $200 million to combat organized crime and fentanyl trafficking as part of a separate pause deal. Whether similar security commitments are part of the current package has not been confirmed.

If the documents get signed, the tariffs go away, at least for now, and the largest bilateral trade relationship in the Western Hemisphere avoids a serious wound. If they don't, the 50% duties snap back, and both countries are right back where they started, only angrier.

Trump has shown he is willing to take tariffs to the brink and pull back when the other side moves. The question is whether three days is enough time for Canada to move far enough, or whether the next deadline will produce another pause, another post, and another round of brinkmanship that leaves American businesses and Canadian exporters guessing.