Tariffs likely to stay, U.S. trade chief suggests

Trump believes duties on Canadian aluminum, steel an effective policy

WASHINGTON— U.S. President Donald Trump will not lift his tariffs on Canadian steel and aluminum without imposing other restrictions to replace them, like quotas, Trump’s trade chief suggested to Congress on Tuesday.

U.S. Trade Representative Robert Lighthizer said any resolution to the tariff dispute with Canada and Mexico has to be one that “protects the president’s basic program” on steel and aluminum. Trump’s view and his view, he said, is that the tariffs have been “very successful.”

“I think there’s a sweet spot there that allows us to have a solution that satisfies Canada and Mexico and also maintains the basic integrity of the program,” Lighthizer testified to the Senate Finance Committee, where he was pressed on the tariffs by a series of Republican senators.

Trump repeatedly suggested in 2018 that the steel and aluminum tariffs would be lifted after a deal was reached on a new NAFTA, hinting that he viewed them as a mere negotiating tool. A deal was indeed reached, but Trump has since argued that the tariffs are effective policy in themselves.

Many others, including big businesses and numerous prominent Republicans, have publicly disagreed. Senior Republicans in Congress have suggested to the administration that they will not be willing to ratify the new NAFTA unless the tariffs are eliminated.

A quota is a limit on the amount of exports a country can make to the U.S. Quotas on Canadian steel and aluminum could be set so low that it could severely harm Canadian companies or so high that it would have a negligible impact.

When one Republican senator said he had been hearing concerns about possible quotas, Lighthizer said, “Quotas are not necessarily good or bad. It depends on the level of the quota. If the quota’s at the right level, it’s not troubling for your downstream people.”

Prime Minister Justin Trudeau’s government, which imposed retaliatory tariffs on a host of U.S. products, is in negotiations with Trump’s administration on the issue. Trudeau officials have suggested, though not explicitly said, that Canada’s Parliament will not ratify the new NAFTA until the U.S. tariffs are dropped.

“We need to return to free trade with the U.S. in order to sign a revised free trade agreement,” said Catherine Cobden, president of the Canadian Steel Producers Association.

A quota system “constrains growth,” Cobden said, “and we don’t believe in anything that would constrain growth. We should allow free-market forces to rein.”

Trudeau’s government has not ruled out the possibility of accepting quotas, though it opposes them.

Politico reported in late 2018 that Ambassador David MacNaughton said Canada would only be willing to live with a quota level high enough to allow significant growth for the Canadian industries.