U.S. Reaches Deal With Canada, Mexico to End Steel and Aluminum Tariffs -- Fifth Update
May 17 2019 - 6:48PM
Dow Jones News
By Vivian Salama and Josh Zumbrun in Washington and Kim Mackrael in Ottawa
WASHINGTON -- The Trump administration reached agreements with
Canada and Mexico to end U.S.-imposed tariffs on steel and aluminum
imports and unwind retaliatory measures, removing a major barrier
to the three countries' new trade pact.
Mr. Trump hailed the deal in a speech in Washington, saying the
U.S. "just reached an agreement with Canada and Mexico and we will
be selling our product into those countries without the imposition
of tariffs or major tariffs."
The U.S. agreed to drop its tariffs of 25% against Canadian and
Mexican steel and 10% against their aluminum, while Canada and
Mexico agreed to drop retaliatory tariffs against a wide range of
items -- roughly $15 billion worth of U.S. exports had been
targeted -- from metals to consumer products to food. Canada said
its tariffs would end within two days; Mexico also confirmed the
same timeline.
The deal represents a major breakthrough not just for Ottawa and
Mexico City but also for congressional opponents of the tariffs in
Washington who had threatened to block passage of Mr. Trump's
revamped trade pact with Canada and Mexico, which is intended to
replace the North American Free Trade Agreement.
Many lawmakers believe the tariffs, which the Trump
administration said were necessary to protect America's national
security interests, undermined its alliance with the country's two
neighbors.
The administration is working closely with Canadian and Mexican
negotiators with an eye toward getting the U.S.-Mexico-Canada
Agreement, or USMCA, passed. Key Republican lawmakers have signaled
they wouldn't vote for the USMCA deal, which needs congressional
approval to take effect, unless the steel and aluminum tariffs
against Canada and Mexico were removed.
In his remarks Friday, Mr. Trump said: "Hopefully Congress will
pass the USMCA quickly."
Canadian Prime Minister Justin Trudeau said Friday the removal
of the metals tariffs was the result of steady conversations
between Canadian and U.S. officials and an understanding that the
measures were harming workers and consumers.
"These tariffs on steel and aluminum were the biggest barrier
for ratification" of the new North American trade agreement, Mr.
Trudeau said at a steel plant in Hamilton, Ontario, just west of
Toronto. "We're very optimistic we're going to be able to move
forward well in the coming weeks."
As part of the deal announced Friday, the three nations also
agreed to terminate all pending litigation between them at the
World Trade Organization regarding the metals. The nations also
agreed to take measures to prevent imports of steel and aluminum at
dumping prices.
"The agreement provides for aggressive monitoring and a
mechanism to prevent surges in imports of steel and aluminum," the
office of the U.S. Trade Representative said in a statement.
The USTR said it could reimpose tariffs in the future, but only
if there were a large increase of imports of specific steel and
aluminum products. In that case, the nations could reapply tariffs
on steel and aluminum, but not other products, a mechanism to
ensure that future spats would be focused on metals and wouldn't
spread into other goods.
The Canadian government has taken recent steps to prevent cheap
steel products from entering the country, part of an effort to
convince the U.S. that it wouldn't be a conduit for low-cost steel.
One piece of the U.S. rationale for its tariffs was that if China
dumped low-priced steel on the global market this glut of imports
would slip into North America through Canada or Mexico if they
weren't subject to tariffs that China also faces.
Mexico has made similar moves. In February, the Mexican
government renewed a 15% tariff on steel imports from countries
with which it doesn't have a free-trade agreement, such as China,
also a move to prevent a flood of steel imports.
"Today's agreement will help restore confidence and stability to
the North American steel and aluminum markets," said Leo Gerard,
president of the United Steelworkers. "From day one, we made it
clear that the real problem isn't Canada or Mexico."
For now, the U.S. tariffs remain in place against other trading
partners, including China and the European Union. A number of other
countries, such as Argentina, Brazil and South Korea, agreed to
steel quotas in exchange for avoiding the tariffs.
While the tariffs boosted prices received by the U.S. steel and
aluminum industries, they sharply raised prices for businesses that
use the metals or products made from them.
The Coalition of American Metal Manufacturers and Users, a group
formed in opposition to the tariffs, welcomed the removal of
tariffs against Canada and Mexico, and called for similar
agreements to be reached with other partners.
The new agreement on metals removes one of the major sticking
points that had been threatening USMCA's approval by Congress. The
deal was agreed upon by the three nations last year, and signed by
their leaders in November. But the agreement still needs
ratification from all three nations' legislatures to take
effect.
Other hurdles remain besides the metals tariffs. Democrats in
the U.S. House have signaled they won't allow a vote on the pact
unless worker protections in it are strengthened.
--Anthony Harrup and Santiago Perez in Mexico City contributed
to this article.
Write to Vivian Salama at vivian.salama@wsj.com, Josh Zumbrun at
Josh.Zumbrun@wsj.com and Kim Mackrael at kim.mackrael@wsj.com
(END) Dow Jones Newswires
May 17, 2019 18:33 ET (22:33 GMT)
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