Trump Removes Steel, Aluminum Tariffs on Canada and Mexico

Darnell Taylor
May 18, 2019

Canadian negotiators persuaded their American counterparts to accept that position - a compromise that could allow the Trump administration to holster one of its favourite new trade weapons, while claiming to have enlisted the help of an ally in its ongoing fight.

Trump's threat targets a major chunk of global economic activity with profound disruptions. Under the terms of that agreement, both countries will also scrap retaliatory tariffs they imposed on U.S. products.

Despite the decision, Trump continued his attacks on European Union trade policy.

John Bozzella, president of Global Automakers, said if the president imposed new taxes on autos and auto parts, "American consumers will suffer a body blow". They don't want our farm products, they don't want our cars. "I think they finally heard us", said one source, speaking on the condition of anonymity, citing the delicate new phase of the negotiations.

"We all love Europe but it's not fair".

They discussed the tariff issue, as well as relations with China and the United States-Mexico-Canada trade agreement, according to a Canadian read-out of the call.

Efforts to have the metals tariffs lifted have been tied to ratification of the United States-Mexico-Canada Agreement (USMCA), which was created to replace the 25-year-old NAFTA and which was signed by the three countries' leaders on November 30. "The EU is prepared to negotiate a limited trade agreement (including) cars, but not WTO-illegal managed trade". The decision was originally expected by its Saturday deadline, but reports started circulating this week that President Trump would delay any decision making.

In his proclamation on Friday, Trump described the U.S. auto sector as facing decline due to unfair foreign competition.

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Trump's decision followed a Commerce Department report that concluded rising imports of foreign autos and auto parts threatened US automotive research and development capabilities and thus impaired national security.

"Automotive technological superiority is essential for the national defense", the administration said in a statement.

Citing Ross's conclusions, Trump pointed to a doubling of U.S. imports over the last 34 years but accused Europe and Japan of raising "significant barriers" to accepting American exports in return.

But the statistics don't match market share figures from the industry.

Trump's proclamation said "domestic conditions of competition must be improved by reducing imports" and said a strong USA auto sector is vital to US military superiority. The president however, acknowledged a February report from Commerce Secretary Wilbur Ross that found "automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States".

Trump had initially suggested that he was merely using the tariffs to increase his leverage in NAFTA talks.

Times have been pretty good in the steel industry in recent years; prices hit an all time high last September and companies like Stelco were able to afford a special $100-million cash dividend. The United States a year ago imported $192 billion worth of passenger vehicles and $159 billion in auto parts.

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