President Trump announced an agreement to remove the tariffs imposed on steel and aluminum imports from Canada and Mexico as part of the renegotiated North American Free Trade Agreement (“NAFTA”). The current tariffs included a 25 percent rate on steel imports and 10 percent on aluminum imports. In response to the United States’ steel and aluminum tariffs, Mexico and Canada launched their own retaliatory tariffs on a wide range of products, including pork, whiskey, and orange juice.
The Trump Administration imposed the tariffs under Section 232 of the Trade Expansion Act of 1962, which allows the President to impose restrictions on certain imports if the Department of Commerce finds that such imports “threaten or impair national security.” Section 232 gives the Executive wide latitude to make such determinations, and such decisions need not receive Congressional approval. Indeed, such broad authority caused Congress to debate the merits of Section 232 determinations, and a recent bill was introduced in the Senate to remove the national security determinations from the Department of Commerce to the Department of Defense. Such efforts have stalled.
According to a statement from the United States Trade Representative, the countries will focus on monitoring and enforcement mechanisms to prevent surges of imports of steel and aluminum. A joint statement from the US and Canada indicated that both countries will strive to prevent transshipment from third countries, such as China, and otherwise prevent the importation of products that are unfairly subsidized or sold at dumped prices.
The removal of tariffs was the largest hurdle to Congressional approval of a renegotiated NAFTA–now called the U.S.-Mexico-Canada Agreement (“USMCA”). Now, Congress must approve the deal, although some House Democrats expressed concern over the USMCA’s protections concerning labor, environment, and prescription drugs.
Such efforts from the Trump Administration are a slight respite from the overall trade war. For example, the Administration recently increased pressure on China, going as far as raising tariffs on $200 billion worth of goods to 25 percent, prompting China to retaliate by imposing higher tariffs on US imports.