The Trump administration has agreed to exempt Canada and Mexico from tariffs on steel and aluminum. The deal will likely boost the odds for President Trump’s U.S.-Mexico-Canada Agreement on trade, where the tariffs have been a key sticking point holding up a deal.
“I am pleased to announce that we’ve just reached an agreement with Canada and Mexico and we will be sending our product into those countries without the imposition of tariffs or major tariffs,” Trump told reporters Friday, adding, “Hopefully Congress will pass the USMCA quickly.”
Trudeau first announced the deal at a separate press conference in Ontario earlier Friday. “These tariffs were harming workers and consumers on both sides of the border, and as we look at moving forward with the new NAFTA, it didn’t make a lot of sense to continue to have tariffs on steel and aluminum between our two countries.”
Trudeau added, “Now that we’ve had a full lift of these tariffs, we are going to work with the U.S. to ratify this [USMCA] agreement.”
Trump administration officials have been in talks with their Canadian and Mexican counterparts throughout the week to exempt those countries from the U.S. steel and aluminum tariffs, a key sticking point on USMCA’s passage. Canada and Mexico have demanded the tariffs be removed, and U.S. lawmakers such as Senate Finance Committee Chairman Chuck Grassley, R-Iowa, have said the trade deal cannot pass Congress as long as the tariffs remain.
The exemptions were initially granted when the tariffs of 25% on steel and 10% on aluminum were first enacted last year, but were removed by the White House during the USMCA negotiations as a tactic to pressure Canada and Mexico. It was widely assumed by lawmakers and the business community that the exemptions would be restored once a deal on USMCA, which would replace the 1993 North American Free Trade Agreement, was reached between the three countries.
A deal on USMCA was struck late last year, but the Trump administration initially resisted removing the tariffs, saying any exception would undermine their purpose of protecting U.S. industries. That ended up blocking the USMCA deal’s approval by the legislatures of the three countries.
The deal does not involve quotas to replace the tariffs, according to various news reports.
Even with the tariffs removed, USMCA faces other challenges in Congress. House Speaker Nancy Pelosi, D-Calif., has yet to schedule a vote and has said the U.S. should reopen negotiations on the deal in order to firm up its enforcement provisions, a move that the U.S., Canada, and Mexico all oppose.
