Kathmandu— United States President Donald Trump announced Wednesday that the US has reached a trade agreement with Canada, ensuring no tariffs will be imposed on American farmers and businesses exporting to its northern neighbor. The agreement follows negotiations between Washington and Ottawa and a last-minute pause of threatened 50 percent tariffs by Trump, who cited a “good conversation” with Canadian Prime Minister Mark Carney as prompting the delay. While full details remain unconfirmed, the deal aims to alleviate trade tensions that have strained the US-Canada relationship in recent years.

Tariff Threat Averted

Trump told reporters on Wednesday that tariffs would be “non-existent for farmers,” signaling a resolution to escalating trade concerns. The announcement came after he posted on Truth Social Tuesday that he had paused the implementation of 50 percent tariffs scheduled to take effect, contingent upon finalizing documentation for a deal. These threatened tariffs, which could have impacted approximately $20 billion worth of imports regardless of US-Mexico-Canada Agreement (USMCA) preferential treatment, were a significant point of contention between the two countries.

Key Issues in Negotiation

The auto sector proved to be a key sticking point during negotiations, according to Reuters. Discussions centered around reducing Section 232 tariffs – imposed by the US Commerce Department when imports are deemed a threat to national security – on Canadian vehicles. Proposals included lowering the tariff from 25 percent to 15 percent, with further reductions tied to the amount of US content within each vehicle. These talks involved US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.

Importance of US-Canada Trade

The agreement underscores the significant economic relationship between the two nations. Last year, approximately 72 percent of Canada’s goods exports were destined for the United States. Trump's imposition of tariffs during his previous term had already created strain in this crucial trade corridor, and the threatened additional 50 percent tariff would have further exacerbated those pressures.

Neither US nor Canadian officials have yet confirmed the full details of the agreement, but it represents a step towards stabilizing trade relations between the two countries. Further announcements are expected as documentation is finalized.

(With inputs from Al Jazeera)

Originally published on abcnews.com.np.