US-Canada trade deal: Trump pauses tariffs

What happened: President Trump paused planned 50% tariffs on Canadian goods just hours before their implementation on May 31, 2023, citing a tentative trade deal. The pause is set for three days, with the U.S. Department of Commerce due to make a final decision on June 3. Meanwhile, Mexico has expressed concern over a U.S. preliminary ruling on Mexican strawberry dumping.

Market impact: Canadian equities, particularly materials stocks, surged following the tariff pause. The Canadian dollar also strengthened against most G10 currencies. U.S. companies importing Canadian goods, such as wine and metal products, may see reduced costs and increased profit margins if the deal holds. Conversely, Mexican strawberry exporters face potential headwinds due to the U.S. dumping investigation.

What to watch next: On June 3, the U.S. Department of Commerce will make its final decision on the Canadian tariffs, potentially extending the pause or implementing the 50% duties. Additionally, the U.S. International Trade Commission is set to vote on the Mexican strawberry dumping case on July 14, which could result in import duties on Mexican strawberries.