U.S. sets May 1 tariff threat on Canada, Mexico

The United States has WASHINGTON just applied additional pressure in its rush to get a new NAFTA agreement within several weeks, establishing a May 1 deadline, after which Canada and Mexico would face tariffs on steel and aluminum.

Originally, Canada and Mexico received an indefinite exemption from the tariffs with no expiry date, then numerous countries were added to the exemption list and now there’s an expiry date on the exemptions, when tariffs could snap into place.

The latest tweaks came in presidential orders signed Thursday. An order on aluminum said: “The exemption afforded to ... Canada, Mexico, Australia, Argentina, South Korea, Brazil, and the member countries of the EU shall apply only ... through the close of April 30, 2018.”

Every country seeking a permanent exemption is being asked to negotiate separate arrangements with the U.S., and quotas appear to be part of the American demand. In the case of Canada and Mexico, the U.S. is explicitly tying the issue to NAFTA.

It so happens that May 1 deadline happens to coincide roughly with the last date for finalizing a new NAFTA this year.

The Trump administration fears that any further delay could imperil an agreement, given political realities: the U.S. ratification process takes months to complete, the opposition Democrats could regain control of Congress in January and a firebrand leftist is favoured to become Mexico’s president Dec. 1.

“We think there’s a practical time limit, not a contractual one, not a legislated one, but a practical time limit on the negotiations due to the political calendar,” Commerce Secretary Wilbur Ross told a congressional hearing this week.