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Long-awaited end to Canada's tariff standoff with U.S. finally at hand
Published Friday, May 17, 2019 1:17PM EDT Last Updated Friday, May 17, 2019 5:40PM EDT
OTTAWA -- U.S. President Donald Trump's administration agreed Friday to drop its punitive and controversial tariffs on Canadian steel and aluminum, ending a bitter dispute between historic allies and removing a key obstacle to ratifying the new North American trade pact.
Canada and the U.S. both say they will now work together in the coming weeks to get legal approval of the new continental trade deal -- a reboot of the original, 25-year-old NAFTA, which Trump has staked much of his political reputation on either replacing or ripping up.
Prime Minister Justin Trudeau framed his victory lap carefully so as not to offend the mercurial U.S. president, who called him weak and dishonest after last year's G7 summit in Quebec -- a nadir on Canada-U.S. relations that came at the height of cross-border tensions over trade and tariffs, Trump's preferred lever when it comes to foreign relations.
"This is just pure good news for Canadians," Trudeau said Friday during a previously unscheduled, last-minute visit to a Stelco plant in Hamilton, Canada's steel-manufacturing capital.
"Families will know that their jobs are just a little more secure."
Trudeau avoided mentioning China by name -- the country that the U.S. and Canada must now carefully monitor, under the terms of the agreement, to prevent cheap foreign steel from being dumped into North America. Canada is embroiled in a political crisis with China, which has jailed two Canadian men on national-security grounds and imposed a death sentence on a third for drug smuggling.
The breakthrough was good news politically for an embattled Liberal government that is heading into a federal election in October and must win seats in vote-rich Ontario, where Conservative Premier Doug Ford has mounted a public campaign against the federal carbon tax.
Ford issued a statement, without naming Trudeau, that said he was "pleased" on behalf of his province's workers that the tariffs were coming off.
The deal is a foreign policy win for Trudeau, whose oversight of Canada's most important international relationship has been complicated by a bellicose American president unafraid of flinging personal insults, accusing a key neighbour of threatening national security and accusing Canadian farmers of taking advantage of unfair trading practices.
"We stayed strong because that's what workers were asking ... that's what Canadians were saying," Trudeau said. "These tariffs didn't make sense around national security. They were hurting Canadian consumers, Canadian workers, and American workers and American consumers.
"We did make the commitment to work with the United States on watching how the industry is evolving and making sure that we're not becoming victims of global pressures on our steel industry."
Global Affairs Canada says the tariffs will be removed within two days, while Canada has also agreed to drop all of its retaliatory measures and legal actions against the U.S. at the World Trade Organization.
The deal prompted U.S. Vice-President Mike Pence to announce plans to meet with Trudeau in Ottawa May 30 in hopes of "advancing the U.S.-Mexico-Canada Agreement as swiftly as possible."
"This is WIN for all three nations," Pence tweeted.
Prior to speaking to journalists, Trudeau toured the Stelco facility and met workers to break the news directly to them first. He was joined by several cabinet ministers, including Freeland and Finance Minister Bill Morneau.
Word of the agreement began to trickle out Friday amid reports that U.S. negotiators had backed off long-standing demands for a hard limit on imports of Canadian steel and aluminum, part of an effort to keep cheap Chinese product out of the country.
Last May, Commerce Secretary Wilbur Ross said the tariffs were necessary to prevent a flood of cheap Chinese steel into the U.S. through its NAFTA partner countries, and conceded they were aimed at accelerating trade talks. Canada responded with dollar-for-dollar "countermeasures" on $16 billion worth of American imports.
The Commerce Department said Friday the resolution was good news for American farmers who had been hit with retaliatory tariffs from Canada.
"We have a great relationship with Canada and the prime minister -- we have a great relationship, but they've been charging us extremely high tariffs," Trump said, adding that he hoped Congress would approve the new trade pact quickly now that the tariffs were removed.
For some, however, the scars will linger.
Bruce Heyman, former president Barack Obama's ambassador to Canada, said the decision is good news, but that Trump owes Canada an apology for the way it's been treated.
"He is like the arsonist who lights the fire, puts it out and declares some kind of victory ... like he's the saviour," Heyman said.
Trudeau offered a shout-out to Canadian unions for their support, and said it helped the government hold firm to U.S. demands that it submit to quotas before lifting the tariffs.
"Ending tariffs means Canadians can get back to work," Hassan Yussuf, the president of the Canadian Labour Congress, said on Twitter.
The Trudeau government branded the tariffs as illegal, absurd and insulting, warning that Canada and Mexico would struggle to ratify new deal, which Trump has branded the United States-Mexico-Canada Agreement, or USMCA, with the levies still in place.
Ottawa has also been working to demonstrate to Washington that it has taken steps to stem the flow of cheaper Chinese metals into Canada. But Canada stood firm with the U.S. on one key, related point: it has steadfastly refused to agree to quotas or other limits on its exports to get the tariffs lifted.
The agreement says the U.S. and Canada will establish a process for monitoring steel and aluminum trade between them.
It says the two countries will consult if there's a surge of steel or aluminum imports "beyond historic volumes of trade over a period of time" and gives the countries the right re-impose 25 per-cent duties on steel and 10-per cent on aluminum.
Toronto trade lawyer Lawrence Herman said it's too soon to predict whether Democrats in the U.S. House of Representatives will ratify the new North American trade pact.
"But it looks like some sense of sanity has prevailed in the White House at long last, helped along the way by huge pressure from the U.S. private sector that found these surcharges to be very hurtful."