Trump Links Planned Steel Tariffs to Nafta Renegotiation Effort -- Update
By William Mauldin
WASHINGTON -- President Donald Trump on Monday increased pressure on two top U.S. trading partners, saying he would only lift planned tariffs on steel imports if Mexico and Canada sign a new version of the North American Free Trade Agreement, or Nafta.
"Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed," Mr. Trump said in a morning tweet.
The broad duties on steel and aluminum that Mr. Trump announced on Thursday haven't been imposed yet, and senior officials said Sunday they don't expect key partner countries such as Canada and Mexico to be excluded. Those two countries and others were exempted when former President George W. Bush imposed broad steel tariffs in 2002.
The president's latest comments are part of an effort to put pressure on Canada and Mexico to agree on a renegotiated form of the free-trade agreement, which took effect in 1994 and eliminated tariffs among the three countries. Mr. Trump also criticized Canadian agricultural policy on Monday, saying the nation "must treat our farmers much better. Highly restrictive."
U.S. trade representative Robert Lighthizer was set to meet his counterparts from Mexico and Canada on Monday as the latest round of Nafta talks, in Mexico City, comes to an end.
Mr. Trump has repeatedly said he would pull the U.S. out of Nafta if the partner countries don't agree on a new version with mechanisms designed to balance trade in the bloc. The Trump administration is seeking to update the original labor provisions with stronger rules aimed at lifting the salaries of Mexican manufacturing workers, whom many U.S. officials blame for taking American factory jobs.
The Nafta focus comes as the steel and aluminum tariffs, to be imposed on national-security grounds through a rarely used U.S. law, are worrying key allies and trading partners around the world, as well as GOP lawmakers, who point out the likely effect on consumers of the metals.
Speaking to reporters in Barrie, Ontario, north of Toronto, on Friday, Canadian Prime Minister Justin Trudeau said tariffs would be "absolutely unacceptable," given the integrated nature of the continental steel and aluminum sectors. Half of U.S. steel exports head to Canada, while 39% are shipped to Mexico.
"Disruptions to this integrated market would be significant and serious, " Mr. Trudeau said. "That's why we are pressing upon the American administration the unacceptable nature of these proposals that will hurt them every bit as much as they would hurt us."
"It makes no sense to highlight Canada and Canadian steel and aluminum [as] a security threat to the U.S.," he added.
Mexico's chief Nafta negotiator, Kenneth Smith-Ramos, has said Mexico should be exempt from the proposed steel tariffs, and a Mexican steel industry group has called for "immediate and reciprocal measures" if it isn't.
Mexico's steel industry doesn't receive government subsidies and isn't part of the global steel glut, the Mexican group said, adding that Mexico had a $3.6 billion deficit in steel trade with the U.S. in the past two years.
The European Union has threatened to retaliate against the metals barriers with tariffs on quintessentially American products made in key states. Mr. Trump responded to those warnings over the weekend by saying he would penalize U.S. car imports from Europe.
Germany, a giant auto manufacturer, criticized that plan on Monday. "Such punitive tariffs and additional protectionist measures are an aberration and to the contrary, a joint elimination of trade barriers would be the right approach," said Chancellor Angela Merkel's spokesman, Steffen Seibert.
Many observers say Nafta talks may continue through the rest of the year, hobbled by national elections in the U.S. and Mexico. Retaliation against the steel and aluminum tariffs, however, could come quickly, giving the Trump administration a set of difficult choices if it wants to leave the metal barriers in place until Nafta negotiations are complete.
Write to William Mauldin at email@example.com
(END) Dow Jones Newswires
March 05, 2018 09:10 ET (14:10 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.