WASHINGTON — A potential deal to ease President Donald Trump’s metal tariffs on Mexico and Canada is being complicated by the Trump administration’s push to place strict quotas on imported steel from the two trading partners.
Canada and Mexico have been pushing for the removal of Trump’s 25 percent steel and 10 percent aluminum tariffs ahead of the ceremonial signing of the revised North American Free Trade Agreement this month at the Group of 20 summit meeting in Buenos Aires, Argentina. While the three countries reached a new trade pact in September, the metal tariffs have remained in place, and Canada and Mexico have been pressing the White House to relax the levies before the United States-Mexico-Canada Agreement is signed.
The White House could ultimately lift the aluminum tariffs, but the administration still wants to impose limits on foreign steel to prevent a flood of cheap metals into the United States, according to people briefed on the discussions. U.S. trade negotiators are proposing a quota system that would cap the volume of steel Canada and Mexico can export to the United States each year. The countries are also discussing an agreement that would bolster efforts to combat dumping of cheap metals from China, which has been a source of ire for all three nations.
U.S. trade officials have made some progress in securing an agreement with Mexico, which is eager to eliminate the lingering threat the metal tariffs pose to its economy. But U.S. and Canadian negotiators remain far apart over the potential quotas, with Ottawa insisting on a higher limit and a more flexible system, according to several people briefed on the continuing talks.
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The metal tariffs have proved to be especially frustrating to Canada, a close military ally of the United States that has objected to the Trump administration’s rationale that foreign metals pose a national security threat. Trump imposed the steel and aluminum tariffs using Section 232 of the Trade Expansion Act of 1962, which gives the president the power to tax imports if they are deemed to be a risk to the country.
Chrystia Freeland, Canada’s foreign-affairs minister, reiterated her view Tuesday that the tariffs were “illegal and unjustified” and said she hoped that they would be removed in the spirit of goodwill.
“Now is a great moment to lift these absurd tariffs,” Freeland told reporters in Ottawa. “We could do it this afternoon.”
Justin Trudeau, Canada’s prime minister, has said that getting the tariffs removed is his primary focus before the treaty’s signing and raised the issue in a polite but pointed exchange with the president when the two met this month during ceremonies in Paris commemorating the 100th anniversary of the end of World War I.
“As I’ve repeated to President Trump, I hope we’re able to resolve in the time before we meet each other in the G-20 in Argentina,” Trudeau told reporters after the two leaders spoke.
Gerónimo Gutiérrez, the Mexican ambassador to the United States, said at a briefing this week that he was hopeful the issue would soon be settled, expressing optimism about reaching a deal just before Enrique Peña Nieto is to leave office.
“It’s the expectation that by the time of the signing either a solution or a very clear track that gives enough certainty that a solution is coming,” Gutiérrez said.
But a Mexican official briefed on negotiations said U.S. officials were trying to insert rigid quotas into the deal as a precondition of removing the tariffs.
One of Mexico’s top negotiators, Juan Carlos Baker Pineda, has been pressing the administration to soften the quotas to avoid the kind of strict provisions included in a recently signed South Korean trade pact, said the official, who requested anonymity because he was not authorized to speak publicly. In March, South Korea agreed to adhere to a quota of 2.68 million tons of steel exports to the United States a year, which it said was roughly equivalent to 70 percent of its annual average sent to the U.S. from 2015 to 2017. In exchange, South Korea was exempted from the steel tariffs.
U.S. officials are more optimistic about their ability to reach an agreement with Mexico than with Canada, which is a large supplier of metals to the U.S. military and has negotiated more aggressively with Robert E. Lighthizer, the U.S. trade representative, in demanding a permanent suspension of the tariffs.
The impending signing of the United States-Mexico-Canada Agreement does not mean that the new trade pact is final or that it will go into effect. The Trump administration must still push the agreement through the incoming Democratic majority in the House of Representatives, an arduous process that could take months to complete.