President Donald Trump has announced a deal with Canada and Mexico that would scrap "major tariffs," ending a simmering trade dispute that began when the president imposed tariffs on imported steel and aluminum in the name of national security.
Trump addressed the agreement while speaking before The National Association of Realtors. He urged Congress to approve a new trade pact between the three nations to replace the North American Free Trade Agreement.
Trump did not mention the tariffs he imposed last year on steel and aluminum imports. But he said "we'll be selling our product into those countries without the imposition of tariffs, or major tariffs."
While the tariffs helped many U.S. steel and aluminum makers, the retaliatory tariffs hurt other sectors of the U.S. economy, such as agriculture.
As part of the agreement to scrap the levies, the U.S. will be able to impose new tariffs on Canada and Mexico if they don’t do enough to prevent any surge of imports of the metals, people familiar with the matter said. The nations have also all agreed to ramp up efforts to trace where the metals have come from originally, to stop the diversion of shipments from other nations to dodge the tariffs.
The enforcement system will aim to advantage primary steel and aluminum producers in the three-nation trading bloc to ensure that the metal is melted, poured or smelted regionally.
Canadian Prime Minister Justin Trudeau says Canada stayed strong in asking for a full lift of the Trump administration's tariffs on steel and aluminum.
Trudeau said at a steel facility in Hamilton, Ontario, that now that there is a full lift of those tariffs Canada is going to work with the United States on ratification of the new trade agreement between the U.S., Canada and Mexico.
Trump used a national security justification last year to impose tariffs on imported steel and aluminum. One of the motivations was to pressure Canada and Mexico into agreeing to a rewrite of the North American Free Trade Agreement.
The Canadians and Mexicans did go along with a revamped regional trade deal that was to Trump's liking. But the administration refused to lift the taxes on the metals imports anyway.
Trudeau says the Trump administration's national security justification didn't make sense and it was hurting workers and consumers in Canada and the United States.
Republican senators, led by Finance Committee Chairman Chuck Grassley of Iowa, have emphasized the urgency of approving Trump’s new North American trade deal, known as the USMCA, as well as the importance of removing existing tariffs and avoiding new ones.
The news is receiving a guarded welcome.
Economists say the lifting of the tariffs — which is expected to take place within two days of the announcement — will have minimal impact on the overall Canadian economy but will have a sizable impact on a few industries, such as the automotive sector.
Benjamin Tal and Katherine Judge of CIBC Capital Markets also say they expect Canadian exporters will face new complexity because of the need to track the origins of the steel and aluminum they use in their products.
The Canadian Press and Reuters contributed to this report.