Activity is swirling about a potential rewrite of the North American Free Trade Agreement with President Trump’s announced preliminary trade deal with Mexico. But, as U.S. negotiations with Canada continued on Sept. 5, it was still unclear whether that country also would be part of the pact.
There appeared to be no change on a separate but related trade matter that is probably the most important for the construction industry: steep U.S. tariffs on steel and aluminum imports from Canada and Mexico, and retaliatory measures imposed by those two countries against the U.S.
That issue, the U.S. and Canada agree, is separate from a revision of the 24-year-old NAFTA. That pact has generally treated trade among the three countries as tariff-free, at least until the tariff fight flared up.
The churning over NAFTA increased with Trump’s Aug. 27 announcement of what the U.S. Trade Representative’s (USTR) office termed a “preliminary agreement in principle” with Mexico.
Four days later, Trump formally notified Congress that he intended to sign a trade deal with Mexico. That notification also stated that Canada, “if it is willing,” would be added to the pact.
U.S. industry groups and key lawmakers such as Senate Finance Committee Chairman Orrin Hatch (R-Utah) say that Canada should be included in a NAFTA revision.
But despite intensive negotiations between U.S. Trade Representative Robert Lighthizer and Canada’s top negotiator, Minister of Foreign Affairs Chrystia Freeland, August ended with no agreement between Canada and the U.S.
The negotiators in separate Aug. 31 statements didn’t close the door on a deal, however. Lighthizer said, “The talks were constructive, and we made progress.” Freeland said, “We’ve made good progress but there’s still work to be done.”
Negotiations between the two sides were slated to reconvene Sept. 5.
Lighthizer and Freeland made those statements after Trump had stirred things up when the Toronto Star reported Trump's off-the-record comments to Bloomberg News about trade, including a remark that a deal with Canada would be “totally on our terms.” Trump later confirmed his comments on Twitter.
In a further tweet on Sept. 1, Trump said bluntly, “There is no political necessity to keep Canada in the new NAFTA deal.” He added, ‘If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out.”
Amid all the back-and-forth discussion of North American trade, little was said about the steel and aluminum tariffs. The U.S. on June 1 imposed duties of 25% on steel imports from Canada and Mexico and 10% on aluminum. Canada countered with similar tariffs on U.S. steel. Mexico imposed duties on flat steel and on non-metals products.
A USTR spokesperson told ENR via email on Aug. 29 that the metals tariff negotiations between the U.S. and Mexico “are on their own track separate from NAFTA.”
Canada’s Freeland concurred, saying in an Aug. 31 press conference that the steel and aluminum tariffs are “entirely separate from NAFTA.”
She also said that Canada remains strongly opposed to the U.S. metals tariffs. Freeland added, “They are unjustified and they are illegal.” She said the U.S. stance that metals shipments from Canada constitute a national security threat to the U.S. is “absurd.”
Significant Benefits Seen
Thomas J. Gibson, American Iron and Steel Institute CEO, said in an Aug. 27 statement that NAFTA has provided “significant benefits for the steel industry” but added that the pact needs to be “modernized and strengthened.”
Gibson called the U.S.-Mexico preliminary agreement “an important first step toward ensuring continued robust intra-NAFTA trade and investment but it is now critical that Canada be included in the negotiations and that a new trilateral agreement be reached to update and modernize the NAFTA.”
The Association of Equipment Manufacturers was pleased to see the preliminary deal between the U.S. and Mexico, President Dennis Slater said. He also said AEM wants those countries “to quickly re-engage with Canada to deliver a trilateral agreement.”
Story updated on Sept. 6