The United States on Friday agreed to lift steel and aluminum tariffs imposed on North American trading partners Canada and Mexico, removing one major impediment to enacting the Trump administration’s proposed United States Mexico Canada Agreement (USMCA).
Despite strong opposition from the energy industry, which relies on steel in particular to build infrastructure, the administration one year ago imposed the tariffs on its allies in North America and the European Union. The allies retaliated, imposing tariffs on a variety of U.S. goods.
The tariffs effectively ended negotiations that were underway to approve the USMCA, which is to replace the North American Free Trade Agreement.
Iowa Sen. Charles E. Grassley, who chairs the Finance Committee, had said the USMCA would not move forward with the tariffs in place. The USMCA requires not only congressional approval, but approval by Mexico and Canada before it is enacted.
Following “extensive discussions,” the North American trio on Friday agreed to eliminate the tariffs within 48 hours and to terminate pending litigation in the World Trade Organization.
A joint statement initially issued by Canada indicated the countries plan to implement effective measures to prevent aluminum and steel from being imported “that is unfairly subsidized and/or sold at dumped prices,” as well as prevent transshipments of aluminum and steel made outside of North America to the other country. The North American allies agreed to consult together on the measures.
In addition, Canada officials said an agreed-upon process was established to monitor aluminum and trade steel. “In monitoring for surges, either country may treat products made with steel that is melted and poured in North America separately from products that are not.”
On Friday, ExxonMobil Corp.’s T.J. Wojnar, vice president for corporate strategic planning, made a pitch for enactment of the USMCA. In a blog post, he wrote that in addition to the oil trade, the supermajor “relies on open trade flows and supply chains” to meet the increasing needs of liquefied natural gas, chemicals and petroleum product customers around the world.
For these and other reasons, he said, Congress should support the USMCA.
“Consider that U.S. trade with Canada and Mexico has quadrupled in the past 25 years, reaching nearly $1.3 trillion in 2017,” he wrote. The USMCA would modernize North American trading partnerships providing even more benefits.
With ExxonMobil’s “significant investments” on the Gulf Coast, securing free and open trade flows is “critical” to the producer’s future, Wojnar wrote. “Passage of USMCA will be important to ensure that success.”