U.S. Reaches Deal With Canada, Mexico to End Steel and Aluminum Tariffs -- 5th Update
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 firstname.lastname@example.org, Josh Zumbrun at Josh.Zumbrun@wsj.com and Kim Mackrael at email@example.com
(END) Dow Jones Newswires
May 17, 2019 18:33 ET (22:33 GMT)Copyright (c) 2019 Dow Jones & Company, Inc.