Trump agrees to lift steel tariffs; Mexico, Canada to aid U.S. goods
WASHINGTON — Eager to score a victory on trade, President Donald Trump agreed Friday to remove a large set of tariffs, rather than impose new ones as he has been prone to do, to boost the chances of getting Congress to approve the renegotiated North American Free Trade Agreement.
Trump agreed to withdraw 25% tariffs that he had slapped a year ago onto billions of dollars of steel and aluminum from Canada and Mexico. In return, Canada and Mexico said they would lift retaliatory duties on many American goods, including politically sensitive farm products.
The agreement clears one major hurdle for Trump in his bid to get the revised NAFTA through Congress. Trump had faced heavy bipartisan criticism in Congress for levying tariffs on neighboring countries, particularly Canada, America's close ally. The tariffs were imposed under a section of trade law that allows the president to respond to national security threats, a designation that especially angered Canadians.
"I am pleased to announce that we've just reached an agreement with Canada and Mexico, and we will be sending our product into those countries without the imposition of tariffs or major tariffs," Trump said Friday in announcing the agreement. "Hopefully, Congress will pass the USMCA quickly," he added, using his preferred acronym for the revised NAFTA.
The announcement came just hours after Trump took another conciliatory step, delaying for up to six months his threat to impose sweeping new tariffs on imported autos and auto parts, also on the basis of threats to national security. Had Trump decided to go ahead with those tariffs, it would have sparked a major backlash and likely retaliation from trading partners. After Canada and Mexico, Japan and Germany are the two biggest exporters of autos to the United States.
Taken together, Trump's two moves, delaying one set of tariffs and lifting another, could help deescalate tensions with allies as the administration intensifies its trade fight with China, with whom the United States has the largest trade imbalance and has long struggled to even the playing field.
After many months of trade talks, the United States and China appear to be at an impasse, with both sides having ratcheted up tariffs and digging in on their positions. Trump's unilateral approach to trade and his aggressive use of tariffs have caused friction with allies and adversaries alike.
Analysts said they remained uncertain whether Trump, who has repeatedly praised tariffs, was truly now looking to ease tensions with allies and build a coalition to help bring China to heel, as many lawmakers and policy experts have urged him to do. In postponing the auto tariffs, for example, Trump largely repeated his argument that auto imports constitute a threat to U.S. security, a position rejected by many U.S. trading partners.
"The automotive tariff threat will continue to hover over the negotiations with Japan and the EU," said Wendy Cutler, a top trade negotiator for Presidents George W. Bush and Obama and now with the Asia Society Policy Institute. "It doesn't mean that the (Trump) administration has a clean slate on trade with them."
Trump's removal of steel and aluminum tariffs, however, won widespread applause from businesses and lawmakers.
"The biggest hurdle to ratifying USMCA has been lifted," said Sen. Chuck Grassley, RIowa. The Senate Finance Committee chairman had said the metal tariffs made USMCA a nonstarter.
But the North American deal remains far from assured of ratification by Congress, which is required before it can go into effect. Congressional Democrats have said they would not support the agreement unless changes were made to provisions on enforcing labor rights and the duration that drug companies can keep exclusivity for their products.