It was good news all around on Friday, as President Trump announced a deal to lift steel and aluminum tariffs on Canada and Mexico. The tariffs had been a major obstacle to passing the United States-Mexico-Canada-Agreement
The deal comes two days after Treasury Secretary Steven Mnuchin mentioned in testimony before the Senate Appropriations Committee that one was coming. President Trump announced the news at a National Association of Realtors event, and urged the Senate to ratify his trade deal. The news was also cheered by the Coalition of American Metal Manufacturers and Users, a group of American businesses and trade associations opposed to such tariffs. The CAMMU called on the administration to lift other steel and aluminum tariffs also.
Up north, Canadian Prime Minister Justin Trudeau also urged ratification of the USMCA. Speaking at a Stelco plant in Hamilton, Ontario, Trudeau said, “there was no one breakthrough moment” in negotiations with the U.S. However, he had “lots of conversations with the president over the past week, and an understanding as well that these tariffs were harming workers and consumers on both sides of the border.” The Canadian government also pointed out that they buy more American steel than any country in the world, and that nearly 84% of Canadian aluminum production is exported to the U.S.
Mexico’s foreign affairs undersecretary for North America, Jesus Seade also praised the move, and conveyed the “great enthusiasm” with which it was received in Mexico. “This action opens the path to advance toward the ratification” of the USMCA, he added. The National Chamber of the Iron and Steel Industry also released a statement complimenting the deal. The chamber considers the deal “a strong and very positive step for industry in the entire region.” They added that, “as we have reiterated on diverse occasions, free and fair trade in the region favors the competitiveness of North America.”
All in all, the impact of the tariffs themselves was minimal. They provided no great benefit to U.S Steel, and only served as an unnecessary stumbling block to one of the Trump administration’s major legislative priorities. Lifting the tariffs will be of little real consequence to the American economy, particularly compared to the big prize, ratification of the USMCA. Perhaps some awareness of military history and strategy was in play as well, namely the dangers of fighting a two-front war. Settling America’s dispute with Canada and Mexico will allow the administration to focus its efforts on China.