U.S. sets May 1 tariff threat on Canada, Mexico
New deadline coincides with last date to finalize a new NAFTA this year
WASHINGTON — The U.S. has just applied additional pressure in its rush to get a new NAFTA deal within 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 U.S. 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 coincides 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 hearing this week.
“It’s my view that if we don’t have a resolution within the next month or so, very likely it’ll be kicked over for quite a little while because of the election cycle. Especially in Mexico, where, as you know, there is one candidate who is running on a quite antiAmerican platform.”
There actually has been major movement at the NAFTA table lately. On an issue seen as arguably the No. 1 U.S. negotiating aim, auto manufacturing, the
U.S. has dropped a controversial proposal deemed a non-starter by Canada and Mexico. The U.S. has proposed a more flexible formula for ensuring production in the U.S., rather than a hard rule demanding 50 per cent of every car have U.S. content.