President Donald Trump said the U.S. will lift steel and aluminum tariffs on Canada and Mexico, boosting efforts to encourage lawmakers to ratify a new North American trade deal.
“I’m pleased to announce that we’ve just reached an agreement with Canada and Mexico and will be selling our product into those countries without the imposition of tariffs or major tariffs,” Trump said at an event Friday. “Hopefully Congress will approve the USMCA quickly.”
In a joint statement Friday, Canada said it will lift retaliatory duties on U.S. products as part of the deal, which will take effect within two days. Mexican Deputy Foreign Minister Jesus Seade, in a Twitter post, welcomed Trump’s removal of the duties. Both nations suggested it would open the way for their lawmakers to approve the new trade pact.
The move will lift the 25% steel and 10% aluminum tariffs the U.S. placed on the two trading neighbors almost a year ago in the name of national security. The decision sparked tit-for-tat duties from Canada and Mexico on U.S. farming goods and other products, and became an obstacle for lawmakers in all three nations to ratifying the U.S.-Mexico-Canada Agreement.
As part of the agreement, the U.S. will be able to re-impose the tariffs on metals imports if not enough is done to prevent any surge of metals imports beyond historical levels. The nations have also agreed to ramp up efforts to trace where the metals have come from originally, to stop the diversion of shipments from other nations to dodge tariffs.
The enforcement system will aim to advantage primary steel and aluminum producers in the three-nation trading bloc to ensure that the metal is melted, poured or smelted regionally.
U.S. steelmakers and aluminum producers rebounded off Friday’s lows on optimism that the measures will prevent excess supply from flooding their domestic markets.
A S&P gauge of 13 steelmakers pared losses to 2.4% in New York. The index was down as much as 3.3% earlier. Alcoa Corp., the largest U.S. aluminum producer, declined 1.9%, after sliding as much as 2.5%. Canadian producer Stelco Holdings Inc. climbed more than 11%.
The tariffs have stood in the way of getting Trump’s new North American trade deal approved by Congress, and ratified in Canada and Mexico. Republican senators, led by Finance Committee Chairman Chuck Grassley of Iowa, have emphasized the urgency of approving USMCA, and the importance of removing existing tariffs and avoiding new ones.
The “tariffs on steel and aluminum and our counter measures represented significant barriers to moving forward with the new Nafta agreement,” Canadian Prime Minister Justin Trudeau said at a steel plant in Hamilton, Ontario in a hastily called announcement Friday. U.S. Vice President Mike Pence said on Twitter that he’ll meet with Trudeau in Ottawa on May 30 discuss advancing USMCA.
U.S. business groups and some lawmakers praised the agreement, saying it would help farmers and gather momentum at home for the passage of the USMCA.
“This move, coupled with the lifting of retaliatory duties, will bring immediate relief to American farmers and manufacturers,” said Tom Donohue, president of the U.S. Chamber of Commerce. “This action delivers a welcome burst of momentum for the USMCA in Congress, and we urge the administration and Congress to continue their efforts to chart a path toward its approval as soon as possible.”
Ron Wyden, a Democratic Senator from Oregon, said the tariffs had “caused real hardship, and I am glad that we can get back to the business of growing and making things in the United States and shipping them to customers in North America and beyond.”
Source: bloomberg, forbes
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