The Trump administration is giving Canada and Mexico a chance to escape steel and aluminum tariffs, but only if they make real concessions in the ongoing talks to renegotiate the North American Free Trade Agreement.
A senior administration official speaking on background told reporters that Canada and Mexico will be excluded from the tariffs “for now,” but that it was reserving the right to apply the tariffs to the two countries later, depending on how the talks go.
“Essentially, what we are doing is giving Canada and Mexico sufficient time to address these issues at the request of the governments, but it is not open-ended. We fully expect this to be resolved in a short enough time period … to allow constructive discussions,” the official said.
The official did not specifically say that the U.S. is demanding concessions in NAFTA related to steel and aluminum. He said that if the countries came up with “alternate means” to address the U.S. concerns, then the administration would “flexibly modify the orders.”
The president on Thursday signed executive orders for the tariffs of 25 percent on steel imports and 10 percent on aluminum on Thursday. They will take effect in 15 days.
The administration has justified the tariffs on national security grounds under Section 232 of the Trade Expansion Act in order to protect domestic defense industries, and thus protect U.S. national security. The official argued that included ensuring the ability of domestic manufacturers to continue to produce steel and aluminum.
“We are offering the opportunity to these two countries to discuss with the president’s representatives, and especially the U.S. Trade Representative, a way where we can simultaneously defend our steel and aluminum industries at the same time we strengthen our security relationship. NAFTA is part of our security relationship as well as our economic relationship so it is natural for these discussions to take place,” the official said.
The U.S., Canada, and Mexico concluded the seventh round of talks to renegotiate NAFTA this week. The U.S. trading partners have resisted most of the administration’s proposals to rework the 1993 deal and White House officials have been clearly frustrated.
“We have closed out only three additional chapters… To complete NAFTA 2.0 we will need agreement on roughly 30 chapters. So far, after seven months, we have completed just six,” U.S. Trade Representative Robert Lighthizer said in Mexico City Monday at the conclusion of the last talks.
That same day, Trump linked the tariffs to NAFTA in a series of tweets. “We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”
NAFTA countries have sharply criticized the U.S. move. “Mexico shouldn’t be included in steel & aluminum tariffs. It’s the wrong way to incentivize the creation of a new & modern #NAFTA,” Mexican Economic Minister Ildefonso Guajardo tweeted on Monday. Canadian Foreign Minister Chrystia Freeland said Monday the tariffs were “absolutely unacceptable” and her country would take “appropriate and responsive measures to defend our trade interests” should the U.S. implement them.
