President Donald Trump lifted steel and aluminum tariffs on Canada and Mexico on Friday, a move designed to ease one area of tensions even as the President’s wider trade agenda faces an uncertain future.
A joint statement from the US and Canadian governments said the tariffs – which had been in place for a year – would be removed within two days. The two sides agreed on monitoring and enforcement mechanisms to prevent steel dumping that might affect prices.
The announcement came a day after the Trump administration announced it would delay a decision on imposing new tariffs on foreign automobiles, in part because it said it was working to negotiate new trade agreements with Japan and the European Union.
Taken together, the two moves amount to attempt to ease global trade tensions at a moment when markets and investors are still reeling from Trump’s decision to apply new tariffs on China after trade negotiations with Beijing collapsed last week. China has said it would retaliate with its own escalated tariffs on US exports.
Trump does not appear poised to quickly end that standoff, and officials say talks with the Chinese are at a standstill as both sides regroup from the setback. US negotiators were expected to travel to Beijing in the near future to resume talks, but Chinese officials have cast doubt on the likelihood that trip would happen anytime soon.
Trump is expected to meet Chinese President Xi Jinping at the end of June at a G20 summit in Japan, and the prospect of US-China trade tensions being resolved before then are slim, according to officials.
Trump, who monitors the stock market closely, is not preparing to back off his hardline stance on China. But the pair of trade moves at the end of this week signal the administration is looking to avoid further inflaming an uncertain global trade environment.
The metal tariffs – 25% on steel and 10% on aluminum – had caused a deep rift in the ordinarily cheerful US-Canada relationship, which officials say suffered as Trump repeatedly refused Canadian Prime Minister Justin Trudeau’s requests to reverse course. On Friday, however, those tensions seemed to be cast aside for now as both leaders hailed the breakthrough.
“We have a great relationship with Canada, the prime minister,” Trump said in remarks on Friday. Without providing details of the agreement, he said the breakthrough would be “a fantastic deal for our country.”
Trudeau, touring a steel mill in Ontario, said the resolution was the result of “lots of conversations with the President over the past week and understanding as well that these tariffs were harming workers and consumers on both sides of the border.”
The removal of steel and aluminum tariffs on Canada and Mexico clears a key hurdle for ratification of Trump’s replacement for the North American Free Trade Agreement, though final passage of that pact remains uncertain as US Democrats voice concern about labor and environmental provisions contained in the deal.
Officials from Canada and Mexico had been adamant that they would not ratify the new US-Canada-Mexico Agreement, signed by leaders of all three countries late last year, until the metal tariffs were removed.
The tariffs, which were imposed last year on national security grounds, have been a source of consternation on Capitol Hill, with lawmakers from both parties calling on Trump to lift them.
And while lifting the tariffs will eliminate one hurdle toward passing the new North American trade deal, the package still faces questions from Democrats who say it does not adequately address labor or environmental concerns. The deal will need to muster enough support from Democrats, who control the House of Representatives, to gain passage.
The move is expected to avert retaliatory tariffs Canada and Mexico had been considering to pressure Trump on the issue. Canada had already applied levies on US pork and dairy products, angering US farmers who rely on that market for their livelihoods.
The White House move comes after Canadian Prime Minister Justin Trudeau reached out to Trump by phone three times in less than a week. On Wednesday, Foreign Minister Chrystia Freeland met with US Trade Representative Robert Lighthizer in Washington to try and hammer out the details.