By Kanishka Singh, Promit Mukherjee and Maria Cheng
WASHINGTON/OTTAWA, Aug 18 (Reuters) - U.S. President Donald Trump announced late on Tuesday night he was putting a three-day pause on new 50% tariffs set to go into effect on Canadian goods on Wednesday, saying the two countries had reached an agreement.
The pause was "based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL," Trump said in a post on Truth Social.
There was no immediate comment or confirmation
from the Canadian government.
Trump added in his social media post that the Keystone XL Pipeline - a project canceled by former President Joe Biden in 2021 after years of indigenous and environmental opposition - "may be awoken from the grave," but did not provide details.
Trump's post came after he spoke with Canadian Prime Minister Mark Carney on Tuesday afternoon, their second conversation this week, and after weeks of intense, opaque negotiations.
Existing U.S. auto tariffs had been a sticking point, two industry sources familiar with the talks said earlier.
The new U.S. tariffs would have covered about $20 billion worth of imports and applied regardless of whether Canadian goods qualify for preferential treatment under the U.S.-Mexico-Canada trade agreement, which has shielded much of Canadian industry from earlier U.S. tariffs.
BILLIONS OF DOLLARS AT STAKE: BUSINESS GROUP
Trade experts and industry officials say new tariffs could lead to job losses and business closures in vulnerable sectors, including lumber, wine and dairy. They also warn the dispute could complicate broader USMCA negotiations.
"There are billions in goods per year that were not impacted before, but now are at risk of being impacted significantly," said Candace Laing, CEO of the Canadian Chamber of Commerce.
"Business have been doing a high-wire act for well over a year, holding off on hiring, investment and growing in Canada," she said.
Canada's minister responsible for U.S. trade, Dominic LeBlanc, and chief trade negotiator Janice Charette have been in Washington since last week for talks.
On Monday, the Canadian officials met for nearly two hours with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.
Greer has repeatedly cited Canada's tariffs that followed initial U.S. tariffs, some provinces' refusal to stock U.S. liquor and Canada's dairy supply management system among U.S. grievances.
Two sources said one of the main sticking points was U.S. tariffs on Canadian vehicles.
The sides have discussed cutting U.S. Section 232 tariffs on Canadian vehicles to 15% from 25%, with further reductions based on the amount of U.S. content in each vehicle, the sources said.
The details of the deal touted by Trump remained unclear.
COUNTING TARIFF DEDUCTIONS
A major point of contention was how tariff deductions based on content should be calculated, with Washington demanding that only U.S.-produced content be counted. Canada pushed for all North American content, including Canadian and Mexican parts, to be counted, the sources said.
Earlier on Tuesday, the U.S. Commerce Department released new rules for automakers exporting from Canada and Mexico to certify their current levels of U.S. content for tariff deductions, reducing the complicated exercise to once per year from twice.
But the Federal Register notice said automakers must re-certify vehicles' American content by September 30 for them to claim deductions in the new annual cycle starting December 1.
A Canadian government source said last week that all options remained on the table if the new tariffs take effect, including government support for affected domestic industries and a possible suspension of bilateral trade talks, but the source expressed hope that the U.S. was keen to reach a deal.
(Reporting by Kanishka Singh in Washington and Promit Mukherjee and Maria Cheng in Ottawa, additional reporting by David Lawder and David Shepardson in Washington; Editing by Rod Nickel and Raju Gopalakrishnan)
