Donald Trump reaches deal to lift US tariffs on Canadian and Mexican metals

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US President Donald Trump has taken steps to ease tensions with America’s allies – lifting import taxes on Canadian and Mexican steel and aluminium and delaying auto tariffs that would have hurt Japan and Europe.

Key points: 

  • The US and Canada have agreed to work to prevent cheap imports of steel and aluminium from entering North America
  • The new trade deal needs approval from legislatures in the US, Canada and Mexico
  • Some in Washington are urging Mr Trump to get tougher on tariffs with China

By removing the metals tariffs on Canada and Mexico, Mr Trump cleared a key roadblock to a North American trade pact his team negotiated last year.

As part of Friday’s arrangement, the Canadians and Mexicans agreed to scrap retaliatory tariffs they had imposed on US goods.

“I’m pleased to announce that we’ve just reached an agreement with Canada and Mexico, and we’ll be selling our product into those countries without the imposition of tariffs, or major tariffs,” Mr Trump said in a speech to the National Association of Realtors.

In a joint statement, the US and Canada said they would work to prevent cheap imports of steel and aluminium from entering North America.

Justin Trudeau and Donald Trump

The provision appeared to target China, which has long been accused of flooding world markets with subsidised metal, driving down world prices and hurting US producers.

The countries could also reimpose the tariffs if they faced a “surge” in steel or aluminium imports.

In Washington, some were urging Mr Trump to take advantage of the truce with US allies to get even tougher with China.

“China is our adversary,” Republican senator Ben Sasse said.

“Canada and Mexico are our friends. The President is right to increase pressure on China for their espionage, their theft of intellectual property, and their hostility toward the rule of law.

“The President is also right to be deescalating tension with our North American allies.”

Earlier Friday, the White House said Mr Trump was delaying for six months any decision to slap tariffs on foreign cars, a move that would have hit Japan and Europe especially hard.

Mr Trump is still hoping to use the threat of auto tariffs to pressure Japan and the European Union into making concessions in ongoing trade talks.

“If agreements are not reached within 180 days, the President will determine whether and what further action needs to be taken,” White House press secretary Sarah Sanders said in a statement.

In imposing the metals tariffs and threatening the ones on autos, the President was relying on a rarely used weapon in the US trade war arsenal – Section 232 of the Trade Expansion Act of 1962 – which lets a president impose tariffs on imports if the Commerce Department deems them a threat to national security.

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But the steel and aluminium tariffs were also designed to coerce Canada and Mexico into agreeing to a rewrite of the North American free-trade pact.

In fact, the Canadians and Mexicans did go along last year with a revamped regional trade deal that was to Mr Trump’s liking, but the administration had refused to lift the taxes on their metals coming into the United States until Friday.

The new trade deal – the US-Mexico-Canada Agreement – needs approval from legislatures in the US, Canada and Mexico.

Canadian Prime Minister Justin Trudeau credited his Government for holding out to get the tariffs removed.

“We stayed strong,” he said. “That’s what workers asked for. These tariffs didn’t make sense around national security. They were hurting Canadian consumers, Canadian workers and American consumers and American workers.”