Donald Trump to lift US steel tariffs on Canada and Mexico, clearing way for new Nafta
- Nations agree to ramp up efforts to trace origins of metals, stopping diversion of shipments from other nations to dodge levies
- Tariffs have stood in the way of getting Trump’s USMCA trade deal approved by Congress, and ratified by Canada and Mexico
The US will lift steel and aluminium tariffs on Canada and Mexico in favour of stronger enforcement actions, in a move that will help clear the way for ratification of the new Nafta.
In a joint statement on Friday, the US said it removed metals tariffs on Canadian steel and aluminium imports in exchange for Canada scrapping retaliatory tariffs on US goods.
The deal will take effect in no longer than two days, according to the statement. Mexico plans to make an announcement later in the day, according to people familiar with the matter.
The move would lift the 25 per cent steel and 10 per cent aluminium tariffs the US placed on the two trading neighbours almost a year ago in the name of national security.
The decision sparked retaliatory duties from Canada and Mexico on US farming goods and other products, and became an obstacle for lawmakers in all three nations to ratifying the deal.
As part of the agreement to scrap the levies, the US will be able to reimpose the tariffs on metals imports if not enough is done to prevent a surge of imports beyond historical levels.
The nations have also agreed to ramp up efforts to trace where the metals have come from originally, to stop the diversion of shipments from other nations with the intention of dodging tariffs, according to people familiar with the matter.
The enforcement system will aim to advantage primary steel and aluminium producers in the three-nation trading bloc to ensure that the metal is melted, poured or smelted regionally.
US steelmakers and aluminium producers rebounded off Friday’s lows on optimism that the measures will prevent excess supply from flooding their domestic markets.
A S&P gauge of 13 steelmakers pared losses to 2.9 per cent at 12.18pm in New York. The index was down as much as 3.3 per cent earlier. Alcoa Corp., the largest US aluminium producer, was down 1.8 per cent, after sliding as much as 2.4 per cent earlier.
Canadian producer Stelco Holdings Inc. rallied as much as 5 per cent, erasing a loss of 1.5 per cent earlier.
The tariffs have stood in the way of getting Trump’s new North American trade deal approved by Congress, and ratified in Canada and Mexico.
Republican senators, led by Finance Committee Chairman Chuck Grassley of Iowa, have emphasised the urgency of approving Trump’s new North American trade deal, known as the USMCA, as well as the importance of removing existing tariffs and avoiding new ones.