For many business groups, the White House’s deal to replace the North American Free Trade Agreement with the U.S.-Mexico-Canada Agreement left one major issue unresolved: whether Canada and Mexico would be exempted from the White House’s steel and aluminum tariffs.
Groups that ordinarily have no connection to the issue, like the farm industry, are now heavily lobbying the White House to give Canada and Mexico a break.
The Trump administration initially carved out exceptions for Canada and Mexico to the 25 percent tariffs on steel imports and 10 percent aluminum tariffs, then revoked them in June as a way to pressure both countries during the NAFTA talks. Now that those talks are tentatively resolved, the White House is being pressured to restored the exemptions in order to get Canada and Mexico to lift the retaliatory tariffs they threw at the U.S. over the summer.
Canada hit the US with tariffs on $12.6 billion worth of goods, on items ranging from steel to ketchup to dishwasher detergent. Mexico responded by placing tariffs on $3 billion worth of U.S. goods including dairy, pork, potatoes and whiskey.
“We want to remove as quickly as we can the tariffs on steel and aluminum and other things that are not necessary now that we have come to an agreement,” said Tom Donohue, president of the Chamber of Commerce in a CNBC interview Wednesday.
The White House has not ruled it out, but has put if off for the time being. On Monday, U.S. Trade Representative Robert Lighthizer said that they’d consider restoring the exemptions “after we have a few days to catch our breath.”
Canada and Mexico are keen to to get their exemptions back as well. On Monday, Canadian Foreign Minister Chrystia Freeland said that they have been “actively discussing with the United States since the imposition of the tariffs. We’re going to continue to do that.”
However, there has been no indication that any additional talks were currently underway or planned, with representatives of all three countries declining to directly comment on the matter to the Washington Examiner.
Restoring the exemptions is as important as the USMCA deal itself for some groups. “As long as the 232 tariffs are in place we don’t have the benefits of the new agreement,” said David Anhelm, chairman of the National Cheese Institute, referring to the section of trade law that President Trump used to justify steel and aluminum tariffs. While the USMCA opens up Canadian dairy markets to U.S. products, the tariffs that Mexico has applied are a bigger concern to the industry.
The White House removed the exemptions on June 1, claiming that the tariffs had to encompass all nations in order to be effective. However administration sources, speaking on background at the time, conceded the real reason was to pressure Canada and Mexico to make concessions on NAFTA.
The specific list of items Mexico subjected to tariffs included several items for which the country is practically Texas’ sole market, an attempt to pressure Trump by hitting a strongly Republican state. These include: pork, whiskey, and flat-rolled iron.
“In the near term, we’re still urging the administration to lift those steel tariffs to get rid of the retaliatory tariffs on pork,” Jim Heimerl, president of the National Pork Producers Council. “I don’t want to speak for Mexico, but we’re pretty confident that if the metal tariffs were removed, they’d remove their 20 percent tariffs on pork.”
