A temporary reprieve from the latest U.S. tariff onslaught is being welcomed by Canadian business groups, but the delay is doing little to clear the uncertainty clouding the investment outlook and hampering companies’ ability to plan for the future.
“Businesses cannot confidently make long-term decisions about production, hiring, technology adoption and capital investment without knowing the conditions under which they will trade with their largest market,” Dennis Darby, head of Canadian Manufacturers & Exporters, said in a news release Wednesday.
“Delay may buy time, but it does not remove the damage caused by uncertainty.”
U.S. President Donald Trump announced late Tuesday he would delay new 50 per cent tariffs on roughly $28 billion in Canadian goods for three days as talks continue to finalize a new trade deal.
The levies, which had been slated to take effect first thing Wednesday, would have been imposed using an obscure legal tool dating back to the Great Depression, Section 338 of the Tariff Act of 1930. They were targeted at specific Canadian industries, including exports of honey, hockey sticks, cement and wine.
The so-called Section 338 tariffs would have been in addition to U.S. tariffs imposed last year in the name of national security on a narrower array of Canadian goods — softwood lumber, autos and aluminum, among others — under Section 232 of the Trade Expansion Act of 1962.
“Negotiators should use this additional time purposefully to pursue a comprehensive agreement. For CME, this means preventing the Section 338 tariffs, addressing existing Section 232 tariffs — particularly those on steel, aluminum, autos and auto parts — and creating a clear path toward a renewed CUSMA and a stable, predictable North American trading relationship,” Darby said.
Candace Laing, president and CEO of the Canadian Chamber of Commerce, said an extension doesn’t bring the certainty of a signed interim deal.
“This limbo state is not anyone’s preferred outcome — time is of the essence,” Laing said.
“We commend the negotiating team for their work and sense of urgency this week, and call on them to keep it up: ultimately, a resilient and integrated North American economy would be a stronger one for all.”
Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said on social media Tuesday that the U.S. removing the 50 per cent tariff threat and approving the Keystone XL pipeline would be steps in the right direction, but the sectoral tariffs also need to be dealt with.
In posts on his Truth Social platform, U.S. President Donald Trump suggested reviving the defunct cross-border oil pipeline — the subject of a nearly two-decade political and legal saga — is a factor in negotiations. The posts included a rendering of the president yanking the pipeline out of a grave.
Marty Warren, the national director of the United Steelworkers Union, said no deal would be better than a bad one that sacrifices Canadian workers, jobs or key industries.
“This pause provides some breathing room,” he said.
“Canada must use it to keep pushing for an outcome that protects workers, strengthens Canadian industries and builds a more resilient economy.”
The B.C. Lumber Trade Council and Council of Forest Industries said in a joint statement that the implications for that sector are unclear, given the Section 232 tariffs and the long-standing softwood lumber dispute continue to loom.
Serge Desgagnés, executive director of the Canadian Corrugated and Containerboard Association, said tariffs on those packaging products would spill over into the entire Canadian economy.
“Everything moves in a box — groceries, pharmaceuticals and medical supplies, e‑commerce orders, industrial goods, manufacturing parts, consumer products — so any cost or delay applied to these materials ripples through virtually every sector,” Desgagnés said.
“This is not a niche trade issue; it’s a direct threat to the cost structure and reliability of North America’s supply chains.”
William Pellerin, a partner in international trade at law firm McMillan LLP in Ottawa, said some clients are “taking a bit of a sigh of relief” with the delay, but not much is changing on the ground just yet. U.S. businesses have been changing their buying patterns since last month, when the Section 338 tariffs were announced.
“If you’re a purchaser of plywood from Canada and you’re located in the United States, you’ve already stopped buying,” Pellerin said.
“So until something is completely rolled back and that threat disappears, the fact of the matter is that Canadian exporters have lost sales into the Canadian market already.”
The longer the existing Section 232 tariffs remain on certain sectors, and the longer a broader array of industries have to deal with the threat of 50 per cent Section 338 tariffs, the harder it is for businesses to stay afloat, Pellerin added. That could mean layoffs or in some cases entire plants having to shut down.
“These people are on pins and needles and trying to make it work, and the U.S. businesses are pivoting away from Canada with every day that passes.”
This report by The Canadian Press was first published Aug. 19, 2026.
— With files from Craig Lord and David Baxter in Ottawa.
