A punishing 50% tariff on roughly $28 billion worth of Canadian goods was barreling toward a midnight deadline Friday night, with U.S. and Canadian negotiators racing to convert a handshake trade agreement into signed legal text before the levies automatically kick in.

President Trump first threatened the tariff in July, retaliation for what he called Canada's unfair treatment of American dairy, wine and auto exports — including Ottawa's supply-managed dairy quotas and duties on U.S.-made vehicles. The list of targeted Canadian products is broad: hockey sticks, wine, cement and, in a later expansion, aircraft sold into the U.S. market.

The tariffs were originally due to take effect earlier in the week, but Trump granted a last-minute reprieve. In a Truth Social post Wednesday, he said he would hold off for three days so both governments could finalize what he described as an all-but-complete agreement, pending only "the finalization of documents." That grace period pushed the effective deadline to Saturday.

What's reportedly in the deal

According to reporting from the Washington Post, the emerging framework would pair Canadian concessions on tariff-free dairy access and its own retaliatory duties with U.S. commitments to shelve a newly threatened set of Section 338 tariffs and ease existing steel and aluminum levies. Canada would also reportedly commit to cooperation on energy, defense and critical minerals — a package designed to give both sides something to point to as a win.

Trump told reporters Friday the two countries "should be able" to land an agreement, according to CNBC, striking a notably softer tone than the fire-and-brimstone rhetoric that accompanied the original threat. Canadian officials have been similarly tight-lipped about specifics while negotiators finish the legal text.

"SHOULD BE ABLE TO GET IT DONE" — TRUMP, ON THE CANADA TRADE DEAL

The stakes are real on both sides of the border. The Ambassador Bridge connecting Detroit and Windsor alone carries more than a quarter of all merchandise trade between the two countries by value, and industries from autos to aerospace to booze have been bracing for the tariff's impact for weeks. A 50% duty on aircraft sold in the U.S., in particular, would hit Canadian aerospace manufacturers hard just as they compete for contracts with Boeing and other American suppliers.

This is not the first time this year Trump has used a hard deadline as leverage before pulling back. Canadian negotiators, who have been through several rounds of tariff threats and reprieves in 2026 alone, are said to be wary of declaring victory until documents are actually signed. A previous version of this same fight nearly boiled over in mid-August before both sides described themselves as "close" to an agreement, only for the deadline to be extended again.

What happens if no deal is signed by the deadline remains unclear. Trade lawyers who have tracked the dispute say the tariffs are technically set to take effect automatically absent a new presidential order, meaning a further extension would require Trump to act again at the last minute, as he did earlier in the week.

Markets have largely shrugged off the on-again, off-again nature of the threat, wagering that a deal — even a modest one — is more likely than a full-blown tariff shock between two of the world's largest trading partners. Confirmation of a signed agreement, or its absence, is expected within hours of the weekend deadline.