President announces three-day pause for new import taxes because U.S. and Canada are close to a deal

What's going on with President Donald Trump's plan for new tariffs for Canada? This photo shows a car carrier traveling into the U.S. from Canada over the Lewiston-Queenston Bridge that spans the Niagara River.

President Donald Trump has backed away from imposing new 50% tariffs on $20 billion worth of Canadian goods that had been slated to kick in early Wednesday.

"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!" Trump said in a social-media post late Tuesday. He hinted that the contentious Keystone XL oil pipeline, which had its permit revoked by former President Joe Biden, might be part of the deal, saying that the pipeline "may be awoken from the grave."

Ahead of the decision to hold off on the new tariffs, analysts had been forecasting that Trump would back down.

The new tariff plan, announced on July 20, was set to make use of Section 338 of the Tariff Act of 1930. Administration officials have been turning to a range of possible authorities to impose import taxes after the Supreme Court in February ruled against the use of the International Emergency Economic Powers Act of 1977 to justify tariffs.

Trump administration officials last month described the planned 50% tariffs on Canada as a response to that country's "discrimination" against U.S. alcoholic beverages, U.S. dairy products and U.S. motor vehicles. The Canadian goods that appeared on track to face new 50% duties included milk, cream and whey, as well as hockey equipment, liquor and wood products like particle board.

Analysts had said the economic effects of the new tariffs would have been modest, as they would only cover about 5% of total Canadian imports.

-Victor Reklaitis