In New Pact, US, Canada, Mexico Cancel Tariffs on Steel, Aluminum
Update 5/20: Tariffs officially removed as of May 20
In a move that construction contractors and heavy-equipment makers welcomed, the U.S., Canada and Mexico have agreed to put a quick end to the tariffs they have had in place for nearly a year on each other’s shipments of steel and aluminum.
Advocates of a Trump administration-negotiated U.S.-Mexico-Canada trade agreement (USMCA) hope that the tariff action, announced on May 17, will encourage Congress to approve that broader pact. But Senate Minority Leader Chuck Schumer (D-N.Y.) said that many other issues need to be settled before Democrats would back the USMCA.
The tariffs were officially removed in short order. According to proclamations that President Trump issued on May 19, tariffs on steel and on aluminum ended for "goods entered for consumption, or withdrawn from warehouse for consumption" beginning at 12:01 a.m. Eastern time on May 20.
Canada's Prime Minister, Justin Trudeau, called the tariff move "terrific news for Canadian steel and aluminum workers, their families and many communities across the country."
Trump on March 1, 2018, announced he would set duties of 25% on steel shipments and 10% on aluminum imports from Canada and Mexico. The tariffs took effect last June 1. [See March 2018 ENR story here.]
Canada swiftly retaliated with similar charges on U.S. steel and aluminum and Mexico struck back with tariffs on U.S. flat steel and nonmetals items.
Contractors, equipment makers comment
Ken Simonson, the Associated General Contractors of America’s chief economist, said in an email that ending the steel and aluminum tariffs “would be a very welcome development for contractors buying steel, aluminum and products incorporating those metals.”
Simonson added that “a widening of export opportunities for U.S. producers that have been burdened by the tariffs should lead to an uptick in orders for construction of export-oriented manufacturing, distribution and transportation facilities.”
The Association of Equipment Manufacturers also said the tariff news was encouraging. Dennis Slater, AEM president, said in a statement, “Today’s action responds to the concerns voiced by equipment manufacturers and we strongly support it.”
Slater also urged Congress to approve the U.S-Mexico-Canada trade agreement that Trump wants to see ratified. Moreover, Slater called on Trump to lift U.S. tariffs on steel and aluminum coming from all other countries.
Other details of the agreement
Among other provisions of the tariff-lifting agreement, Canada and the U.S. also pledged to end related litigation pending before the World Trade Organization. In addition, they will set up a process for monitoring their steel and aluminum trade. [See outline of agreement, including list of specific types of metals imports it covers from the Office of U.S. Trade Representative here.]
If there are surges in imports of the metals, the importing country may seek “consultations” with the country where the shipments originate, the joint statement said. That could lead to restoring the 25% tariffs on steel and 10% on aluminum.
American Iron and Steel Institute president and chief executive officer Thomas J. Gibson said in a May 18 statement that, under the tariff program, the U.S. steel industry has been able to restart steel mills, recall workers who were laid off and announce planned capacity expansions.
Gibson also noted, "The new agreements with Canada and Mexico will enable us to cooperate further and take actions to address transshipment, import surges and other related issues in the future."
Leo Gerard, international president of the United Steelworkers union (USW), said in a statement, “Today’s agreement will help restore confidence and stability to the North American steel and aluminum markets.”
The USW has members in Canada, and Gerard added that lifting the tariffs should keep the U.S.-Canada economic and other ties strong and also ensure that the union’s Canadian members who work in steel and aluminum “will no longer be hurt.”
U.S. Chamber of Commerce President and Chief Executive Officer Thomas Donohue praised the tariff news. “Critically, this action delivers a welcome burst of momentum for the USMCA in Congress,” Donohue added in a statement, and urged the Trump administration and Congress to work on approving the pact.
Schumer said in a statement that lifting the tariffs “is a good thing.” But he added, “There are still many other issues outstanding before Democrats would support the USMCA.”