United States Expected to Lift Metal Tariffs on Canada and Mexico

 nytimes.com  05/17/2019 16:32:13   Ana Swanson
A steel maker in Finland. The Trump administration is expected to lift tariffs on metals imported from Canada and Mexico, but the move does not guarantee passage of a new trade deal.CreditCreditJuho Kuva for The New York Times

WASHINGTON  The Trump administration has reached agreements with Canada and Mexico to lift tariffs on metals imported from those countries, people familiar with the matter said, resolving a yearlong standoff that inflamed North Atlantic tensions and complicated efforts to ratify a revised trade deal.

The agreements, which could be announced as early as Friday, would essentially free both countries from President Trumps tariffs but set up a mechanism for monitoring and enforcement in the case of import surges.

It is unclear when exactly the agreement would go into force and the terms of the deal could still change before it is officially announced.

Mr. Trump discussed metal tariffs the United States had placed on Canada and the retaliatory tariffs that Canada placed on the United States in a call with Canadian Prime Minister Justin Trudeau, the Canadian government said Friday. The prime minister was expected to speak Friday at a steel company in Hamilton, Ontario.

The decision to ease the 25 percent tariffs on steel and 10 percent tariffs on aluminum would come as the White House also announced a six-month delay in determining whether to impose levies on foreign automobiles. That extension delivers a temporary reprieve to global automakers and auto suppliers, which had been bracing for punishing tariffs of up to 25 percent. But it sets up a tight six-month deadline for the president and his advisers to reach trade deals with Japan, Europe and potentially other countries.

The rollback of metal tariffs would likely result in Canada and Mexico lifting the retaliatory levies that they have placed on American businesses, easing some of the pressure of the presidents trade war. Canada and Mexico put taxes on a variety of American goods in return for Mr. Trumps metal tariffs, but their tariffs on products like pork, cheese and milk have especially hurt American farmers who are already smarting from trade conflicts with China and Europe.

The agreement is also likely to help the administration focus on the other trade fights it is waging, most notably fractious negotiations with China, which nearly collapsed last week.

But it is unclear whether it will be enough to help secure passage of the new United States-Mexico-Canada Agreement in Congress. The United States, Canada and Mexico signed that trade deal, the successor to the North American Free Trade Agreement, in November. The pact still needs to be ratified by legislatures in all three countries.

American lawmakers of both parties, as well as Canada and Mexico, had insisted that tariffs on steel and aluminum must be lifted before votes would be held. Lawmakers have argued that the tariffs, while aimed at other countries, are hurting American companies and consumers by raising prices for products that use imported steel and aluminum.

Even with an agreement to resolve metal tariffs, the North American pact still faces potential opposition from congressional Democrats. They have criticized its labor and environmental protections as insufficiently weak, and said that its protections for drug companies may undermine their efforts to make health care more affordable.

Canada, like Mexico, has repeatedly said it wont ratify the new North American Free Trade Agreement, which Mr. Trump considers one of his signature economic achievements, unless the metal tariffs were lifted. Canada has argued that the tariffs undermined both countries economies and were particularly counter-productive given the United States-Mexico-Canada Agreement reached late last year.

As long as the tariffs are in place, ratification will be very, very problematic, Chrystia Freeland, the Canadian foreign minister, said during a visit to Washington on Wednesday.

After Mr. Trump imposed the metals tariffs last June, the move drew anger, bemusement and disappointment in the metals industry and across the political spectrum in Canada. Canadians were irate that Mr. Trump appeared intent on punishing Canada, a major trading partner and traditionally one of its most ardent allies. Backed by all three of Canadas three major political parties, the Canadian government retaliated with import duties on $12.6 billion of American products, from ballpoint pens to industrial pipes.

The White Houses justifying the tariffs on the grounds of national security drew particular scorn in Canada, where many Canadians were already reeling from Mr. Trumps bullying and mocking of Mr. Trudeau and his trade policies. Some Canadians called for boycotts of American products and avoiding taking vacations in the United States.

The American tariffs were particularly punishing to Canada because Canada buys more American steel than any other country, according to the Canadian government, while nearly 90% of Canadian steel and aluminum exports go to the U.S. In 2017, the Canadian steel industry employed more than 23,000 Canadians and the aluminum industry about 10,500 workers. Following the imposition of the duties, some economists predicted it could cost the Canadian economy more than $3 billion Canadian dollars annually.

Dan Bilefsky contributed reporting from Montreal.

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