President Donald Trump’s Tuesday backpedal from threats to impose 50 percent tariffs on Canada sparked a round of cries of TACO — that “Trump always chickens out.”

But even the administration’s adversaries concede Trump’s latest maximalist menace accomplished something important: unsticking more than a year-and-a-half of stalled trade talks between the two nations and pushing them into serious negotiations.

After months of fitful talks, Canadian and U.S. officials have in the weeks since Trump made his threat made significant headway toward resolving disputes over aluminum, dairy, alcohol and other key trade issues, potentially with some significant concessions from the administration.

That wouldn’t have happened without the president’s July threat to slap new and massive tariffs on items like beer, furs and hockey equipment, Canadian officials, former Democratic administration officials, business representatives and others told POLITICO.

“This was seen as, ‘Well, this is kind of outrageous, so we better pay more attention to it,’” said Canadian Sen. Peter Boehm, chair of the Senate Committee on Foreign Affairs and International Trade. “There was always a sense that there have to be talks, but invoking [the tariffs] did provide the leverage to do that, at 50 percent.”

And Véronique Proulx, the president and CEO of the Quebec Chambers of Commerce Federation, said that the threat “put pressure on the Canadian government to come to the table.”

“Very little had been happening over the past year,” Proulx said.

The prospect of punishing new levies, which could have hobbled the Canadian economy, is the latest example of a uniquely Trumpian negotiating ploy that relies on an ultimatum to gain leverage. The president touted the tactic for decades including in his book “Art of the Deal” and he’s used it repeatedly in his second term — and not just on trade.

To push NATO countries to increase their defense spending, he threatened to withdraw from the alliance and upend eight decades of global world order. When Trump wanted Panama to lower fees on U.S. ships passing through its canal, he threatened to retake the waterway. That threat was withdrawn only after the country approved a deal that allowed U.S. firms – instead of Chinese companies — to control ports on opposite ends of the canal.

And when Trump wanted Canada to drop a digital services tax targeting U.S. tech companies in 2025, he threatened to terminate all trade discussions with Canada, a move that scuttled the tax push.

“This is one case where his maximalist demand worked,” said one person close to the White House. “I don’t think this was [a TACO] actually. I think this is going to end up being an example of a successful negotiation.”

The tactic hasn’t always been successful, though. France still has a digital services tax despite Trump’s threat to impose a 100 percent tariff on wine. And threats to bomb Iran to the “Stone Ages” have not forced Tehran to capitulate to his demands.

Still, the latest threat on Canada appears to have produced some movement between the two countries. While it remains to be seen if Trump officially signs off on a deal, the two sides are negotiating. Canadian and American officials met once again on Wednesday to hash out a formal deal before Friday at midnight, the new deadline to reach an agreement.

Among the proposals are lower U.S. tariffs on metals, which risk backlash from protectionist circles in Washington, according to three people close to the process. On the Canada side, concessions on programs to protect their dairy and lumber industries and a commitment to back off streaming taxes — as an expected rollback remains in flux — are under consideration, while negotiators remain in talks over other long-standing irritants including tariff on automobiles.

And three days is a lifetime in trade negotiations.

White House spokesperson Kush Desai said that Trump has “consistently proven skeptics wrong” and “leveraged the power and might of the U.S. economy – the world’s biggest and best consumer market – to secure nearly 20 trade deals with historic market-access concessions from Japan, Taiwan, Vietnam, and the EU.”

Trump’s trade threats are existential for Canada, which sends roughly 72 percent of its exports to the United States.

While the U.S. tariff threat was targeted toward specific industries and only hit about 5 percent of U.S. imports from Canada, Wilbur Ross, Trump’s first-term Commerce secretary, said he believes it will force Canadian concessions.

“The 50 percent would have been a real burden because 50 percent is more than the exporter can absorb. It’s more than the importer can absorb, so it would have been a real penalty for them,” Ross said.

Canadian negotiators made repeated trips to Washington ahead of the U.S.-Mexico-Canada trade agreements July renewal deadline. But they have largely been kept on the sidelines so far regarding the USMCA update, as U.S. officials insisted that they would not negotiate unless Canada dropped its retaliation on U.S. liquor and automobiles.

When Ottawa offered what it saw as concessions — like peeling back a digital services law that would have raked in billions from U.S. tech giants — the Trump administration dismissed them as irrelevant to the negotiations. U.S. Trade Representative Jamieson Greer said Canada doesn’t “really get credit for doing something bad and then undoing it.”

“What [the Americans] are telling me — and they’ve been telling me for the last 18 months — is first of all, ‘Canada, get over it. You’re not special. I know you think you are. We are now including tariffs on everyone. There’s no exemptions for anybody,’” said one Canadian business official, also granted anonymity to discuss sensitive dynamics around the trade talks.

Productive talks between the U.S. and Canada could also pave the way to begin trilateral discussions with Mexico on the future of the trade agreement.

“They have struggled for a while to get the same attention as Mexico. A deal this week would in a way present the opportunity to move ahead bilaterally,” said Kate Kalutkiewicz, who served as a top trade adviser during Trump’s first administration.

Even as Trump has regularly reached for tariffs as a way to bully countries, the threat against Canada marked a new frontier. The president relied on Section 338 of the Tariff Act of 1930, a Great Depression-era law that had never been used to impose tariffs, to threaten about $20 billion worth of Canadian goods.

A Democrat working as a lobbyist for Canadian interests, granted anonymity to speak candidly about the political dynamics of the trade talks, added that there is “no question” the tariffs “got Canada to the table.”

“Canada was so reluctant to put a deal on the table because they felt that they would be put on the clock to make more concessions above and beyond what they already did.”

That’s why Trump’s threat was needed to push Ottawa to the table, said Kelly Ann Shaw, who served as deputy assistant for international economic affairs during Trump’s first term.

“The two sides appear to have accomplished more in three weeks than in a year of discussion,” she said.

The fact that the threat spurred Canada to the table may encourage the Trump administration to use it again, particularly because these tariffs never went into effect and therefore won’t face legal challenges.

“To me, the 338s, are in some ways, the new IEEPA tariffs,” said one trade lobbyist, granted anonymity to speak candidly about the negotiations, referring to a law Trump used to impose global tariffs, which were struck down by the Supreme Court in February.

Some U.S. businesses are already growing more comfortable with the reality that tariff threats are here to stay — particularly as they’ve watched other countries make concessions that would have been unlikely under previous administrations.

One business official, granted anonymity to speak candidly about private discussions with industry colleagues, said that the administration’s threats are bringing trading partners to the table and opening discussions on longstanding issues.

“Depending on the sector, you’re certainly seeing more understanding of how this is working and how this is being implemented, and you are seeing some of those historic logjam issues being broken,” the official said. “As industry gets more understanding of how this America First trade policy can create those opportunities, I think that there is more acceptance for being able to move forward in this way.”

Oliver Ward, Michael Blanchfield, Zi-Ann Lum and Mickey Djuric contributed to this report.

President Donald Trump is waiting for Iran to cave to his economic pressure. Tehran may be willing to wait even longer.

Even as Treasury Secretary Scott Bessent promises a level of economic isolation “never seen before,” former Trump administration officials, U.S. ambassadors and other Middle East experts are skeptical that tightening the economic vise will force Iran to relinquish its desire to toll ships passing through the State of Hormuz and make the other concessions Trump is demanding to bring an end to the war.

“It’s an attrition campaign, and I am sure Treasury tweaks this or that to fill gaps or expand coverage of sanctions,” said James Jeffrey, a former ambassador who served in the Middle East during three presidential administrations, including Trump’s first term. “But, it’s hard to believe [there will be] something decisive after 20 years of U.S. sanctions and Iranian experience of going around them.”

It’s an acknowledgement that underscores the asymmetry of the situation. The Trump administration is staring down a consequential midterm election amid an unpopular war that has sent oil prices back up to roughly $90 a barrel and helped push long-term borrowing costs to their highest level in nearly two decades as hope dims that a peace deal is near.

Iran’s leaders, meanwhile, see the conflict as existential, giving Tehran reason to absorb the extraordinary economic pain rather than accept terms it believes could imperil the regime — especially as U.S. inflation remains elevated and treasuries sell off.

The yield on 30-year U.S. government bonds, a figure Trump has in the past been attuned to, jumped on Tuesday to its highest level since just before the global financial crisis.

The increase in the yield to its highest level in nearly two decades isn’t solely because of the six-month war; global fuel shortages and broader instability have kept energy prices higher for longer, increasing the threat of persistent inflation. And that’s heaped even more risk on global bond markets that have repeatedly blanched at Trump-related shocks.

“We are in a situation where we’re spending more and more to finance more and more,” said Julia Coronado, founder of MacroPolicy Perspectives. And the war has created “a riskier world full of more frictions, full of more supply shocks.”

Iran’s outsized incentive to muscle through the pain is partly why some former administration officials doubt that the naval blockade, while unprecedented in its scale in the modern era or whatever new strategies Bessent may unveil, will change Iran’s calculus.

“I think the economic pressure would need to hit them in new ways we haven’t seen so far to change the mindset of the regime,” said one former Trump administration official, granted anonymity to candidly assess the impact of the U.S.’s economic pressure campaign.

The administration has yet to indicate what further action it plans to take, but options include going after major Chinese banks that facilitate Iran’s oil trade, expand secondary sanctions on countries doing business with Iran and confiscating Iranian assets under U.S. jurisdiction instead of just freezing them.

Iranian leaders publicly mocked U.S. efforts to sanction them into submission.

“Americans think squeezing Iran harder will win concessions that were never part of the agreement,” Mohammad Bagher Ghalibaf, the speaker of Iran’s parliament, posted on X Tuesday.

“Bessent and [Defense Secretary Pete] Hegseth are way out of their league,” he wrote. “Stop waiting for the clown crew to pull a rabbit out of their hat and clean up the mess you made.”

White House aides, however, continue to contend that the leverage is on its side.

“The crushing sanctions and one of the most successful blockades that have crippled Iran’s economy and has left Iran completely broke,” said one administration official, granted anonymity to share the U.S.’s thinking. “There are many levers the president can crank harder in the weeks and months ahead.”

In the half-year since the Iran war began, the president has deployed an array of pressure tactics to choke Iran economically, including physically preventing the country from selling its most important export — oil — as part of an ongoing naval blockade of Iranian ports. The administration has also sanctioned foreign buyers of Iranian oil, targeted the country’s shadow fleet of ships that ferries it and sought to cut the country off from the financial networks it uses to move money.

That economic pressure has sent Iran’s economy, which was already troubled before the war, into a deeper tailspin. Now, Iran is grappling with year-over-year inflation of 88 percent, long lines and rationing at gas pumps and food prices that have more than doubled.

But those who have worked on previous Iran negotiations say that’s far from enough to get the regime to cave, especially after six months of U.S. bombing that has killed, by Tehran’s own measure, more than 3,000 Iranians.

“It’s undeniable that there is economic pressure. The question is whether there is a breaking point, and I would say for a regime that is fighting for its life and has never hesitated to transfer economic pain to its population, there is no breaking point,” said Ali Vaez, the International Crisis Group’s Iran project director, who helped work to bridge differences between Iran and world powers during negotiations over the 2015 nuclear agreement.

Yet Trump continued to project patience on Tuesday, signaling that he was prepared to let the pressure campaign play out.

“There are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran. The Naval Blockade remains in full force and effect. The Hormuz Strait is open and operating. All water mines have been removed or detonated. Thank you for your attention to this matter!” Trump wrote on Truth Social.

A senior White House official, granted anonymity to discuss the situation in Iran, insisted that Iran will cave long before the pain in the U.S. or world markets become intolerable.

“Ultimately we want a deal, but in the interim, the Iranian economy is tanking … people are lining up for gas, just for a half gallon of gas. And there’s a lot of civil unrest going on in Iran, that’s not being played on the news for whatever reason,” the official said late last week. “We’re fine if that’s the route they want to take.”

Still, there are signs inside the White House that the economic impacts are a growing concern. Vice President JD Vance last week said on Fox News that the administration’s first goal in the Iran war was to “keep oil and gas cheap for Americans all over the country.” The president, meanwhile, has repeatedly insisted voters will bear the pain of higher gas prices for an end to Iran’s nuclear ambitions.

The voters have a more dyspeptic view. A Reuters/Ipsos survey released this week showed Trump’s approval rating at 33 percent, the lowest level of his presidency. Roughly 80 percent of Americans — 87 percent of Democrats and 71 percent of Republicans — think U.S. involvement in Iran “will go on for an extended period of time,” the poll found.

But some former Trump administration officials, however, are holding out hope that patience will be rewarded and that the administration’s economic pressure campaign will work, in part because they see the other options on the table, including putting U.S. boots on the ground in Iran, as politically untenable.

Fred Fleitz, Trump’s former National Security Council chief of staff and vice chair of the American First Policy Institute’s American Security, predicted that the U.S. could be “dealing with a different Iran” in 30 to 60 days.

“I think patience is the best approach,” Fleitz said. “I don’t believe that a large-scale military attack right now is going to make a difference in changing the regime’s position, and I strongly oppose the idea of seizing Kharg Island or sending in American troops. The American people don’t want that. That would really bog us down in a quagmire.”

White House press secretary Karoline Leavitt is leaving her role at the end of August, President Donald Trump said Wednesday.

The president, in a post on Truth Social, said Leavitt is departing to spend more time with her family, but will remain one of his “top outside advisors” and an “influential voice within the Republican Party.”

“Karoline has been one of the best White House Press Secretaries in the History of the Office,” Trump wrote.

Leavitt’s departure comes on the heels of a leave of absence this summer after the May birth of her second child, Viviana. She returned to the White House last month.

Leavitt gave birth to her first child, Niko, during the 2024 presidential campaign, returning to work quickly when the president was shot in Butler, Pennsylvania.

Leavitt, in a post on X, described the job as “the honor and adventure of a lifetime,” but said she had decided to step away to devote her time to being a mom.

“The truth is since returning to the White House after the birth of my daughter, I have felt in my heart that I cannot be the best mom my two young children deserve while devoting the constant time, energy, and attention required of the White House Press Secretary,” she said, “and that is why I have ultimately made the bittersweet decision to depart the White House and embark on a new chapter in my life.”

Trump, in his post, called it “a decision I totally understand and respect!”

Leavitt has served as White House press secretary since the start of the second Trump administration. During Trump’s first term, she interned in the White House Office of Presidential Correspondence while in college before becoming associate director, eventually joining the White House press team as assistant press secretary under then-press secretary Kayleigh McEnany.

As press secretary, she has been widely praised on both the left and the right for being an effective communicator for the president in the White House briefing room. She earned a reputation for her tough but friendly banter with the press in that format.

The White House did not immediately answer questions about who will succeed Leavitt as press secretary and the timeline for replacing her.

Trump had four press secretaries during his first term: Sean Spicer, Sarah Huckabee Sanders, Stephanie Grisham and McEnany.

Israeli Prime Minister Benjamin Netanyahu this week publicly rejected President Donald Trump’s latest Gaza peace plan.

The Trump administration can live with it — for now.

The administration says it’s less concerned with what Netanyahu says than what the Israeli Defense Forces do. A U.S. official, who, like others in the story, was granted anonymity to discuss internal thinking, said that the administration was initially “disappointed” that Israel responded to the 15-point peace proposal by ramping up attacks in Gaza — but is pleased that it has since eased its assault.

Now, the administration is willing to give the Israeli prime minister some leeway to message the peace plan in the way he needs to, the official said. There is broad understanding that he is two months from a tough reelection — and needs to please his own hard-right allies to win. Few expected the president’s roadmap to be wholesale embraced, even as Trump on Truth Social trumpeted it as a “major milestone” in the conflict.

“We recognize the complexities that come from the Israeli elections, and we’re obviously going to give Bibi a space to try and navigate that,” the official said. But in turn, “they need to give us a little bit of space in terms of no targeted killings in order to allow us to try to get to the next phase, so there’s a lot more challenges to go to get there.”

U.S. officials and Hamas negotiated the latest peace framework separately, with help from Middle East allies. The proposal, announced last month, called for Hamas to disarm and relinquish governance in Gaza and Israel to withdraw its military from the territory. The plan stalled when Hamas said it would not disarm until Israel withdrew, and Israel said it would not withdraw until Hamas disarmed.

Even as skeptics of the Trump plan criticized the president for overhyping its achievement, U.S. officials believed that they needed to go public once Hamas was on board to lock in its pledge to disarm. Despite the president’s public confidence, administration officials privately expected that the proposal would likely face pushback from Netanyahu but that talks could continue with Israel.

Still, they considered the roadmap a significant win.

“Nobody’s ever gotten to this point where they got Hamas to agree to this, so that’s a necessary step before actually disarming it,” the U.S. official said.

And there are signs that Israel is preparing for the possibility of withdrawal anyway, with Israeli media reporting Israel’s defense establishment began weighing contingencies to do so in the days after Netanyahu’s public rejection.

Another administration official said the Board of Peace, a 27-country initiative formed as part of Trump’s deal last year to end the war between Israel and Hamas in the Gaza Strip, has been “getting good cooperation on the ground of late.”

“That’s what’s important,” the administration official said.

And it’s not just Trump administration officials hailing the framework as a step in the right direction. Former ambassadors and administration officials, including some who served in the Biden and Obama administrations, see the recent commitment the U.S. secured from Hamas to disarm — a monthslong sticking point in the peace process — as a small, but meaningful step, even as doubts remain whether Hamas will follow through. A member of the Hamas political bureau, according to the Associated Press, said this week that Hamas remains “committed to the roadmap.”

“For Netanyahu, his primary objective, of course, is getting through his election so he’s going to at least voice rejection even while he may allow some aspects of it to move forward,” said Dan Shapiro, a U.S. ambassador to Israel during the Obama administration. “It looks like Trump is tolerating the Netanyahu two-step. These two have done a dance like this before and as long as certain elements of it are moving forward … Trump seems to be willing to tolerate Netanyahu’s stated rejection.”

Even Trump appeared in little hurry Monday to escalate the dispute with Netanyahu, insisting to reporters in the Oval Office that he had a “good relationship” with the Israeli prime minister despite the very public rejection of his peace proposal.

The White House referred requests for comment to the Board of Peace.

A Board of Peace official added that “separate discussions with Israel are continuing.”

“The objective remains the full decommissioning of weapons and ensuring Gaza can never again pose the kind of threat Israel faced on October 7,” the official said. “Plans are moving forward in this regard. We have seen important elements of cooperation in recent days and we are intensifying our efforts to accelerate progress.”

The U.S. official added that Israel remains skeptical that Hamas will follow through on their commitments, while noting the country was similarly skeptical that Hamas would release the Israeli hostages.

“We basically have built a lot of credit with them. And I think that they’re willing to give us more of a shot to see if we can get to the next phase,” the official said. “We’re in an uncomfortable position for everyone, but I think that there’s a pathway to get through it.”

The idea that Israeli troops are at least planning to withdraw — especially if that withdrawal goes to the yellow line in Gaza, a key point of the plan the Board of Peace proposed — is giving Trump allies hope that Netanyahu’s words are meant for a domestic audience, while his actions are meant to demonstrate he might consider a deal in the future.

“Netanyahu’s playing a fairly tricky tightrope, where on the one hand he flexes his muscle for domestic audiences, given his situation at election eve, and on the other hand, he’s doing some baby steps in the direction of the 15-point plan — testing the tolerance of the American or Board of Peace team,” said Nimrod Novik, who served as senior diplomatic adviser to former Israeli Prime Minister Shimon Peres.

James Jeffrey, a former ambassador who served in the Middle East during three presidential administrations, including Trump’s first term, said that “of course it’s a win” to get Hamas to agree to disarm. And, behind the scenes, he said there continues to be movement between the U.S and Israel.

“Slowly we and Israel are moving forward on both Lebanon and Gaza even in the face of Israeli elections,” Jeffrey said.

Still, the incremental movement leaves fundamental questions, which have repeatedly stymied efforts to create a lasting peace between Israel and Gaza. U.S. allies are also concerned that Netanyahu’s public rejection of the latest peace plan is undermining confidence in the Board of Peace and the broader Middle East peace efforts.

Hamas’ willingness to disarm is conditioned on Israel withdrawing from Gaza, leaving unresolved how — and in what order — either side would carry out its commitments.

Hamas is supposed to turn over its weapons to a United Nations-created body responsible for governing the day-to-day operation in Gaza, and that governing authority is supposed to eventually run the territory, supervised by the Board of Peace, though the timeline for leadership handover remains uncertain. And Israel, meanwhile, has not agreed to the withdrawal in the plan, even as its military is preparing for the possibility.

But administration allies don’t really expect some big peace ceremony at Camp David or in Geneva. They’ll settle for dialogue, however tenuous.

“You have to judge these things incrementally in the Middle East,” a person familiar with the White House’s discussions around the peace process said.

Jerry Wu and Daniella Cheslow contributed to this report.