OTTAWA –Canada and the United States have reached an agreement to lift steel and aluminum tariffs, a year after they were first imposed, reviving momentum for the renegotiated USMCA deal to be ratified.
"These continued tariffs on steel and aluminum, and our countermeasures, represented significant barriers to moving forward with the new NAFTA agreement. Now that we’ve had a full lift on these tariffs we are going to work with the United States on timing for ratification," said Prime Minister Justin Trudeau during a hastily-called media availability at the Stelco steel plant in Hamilton, Ont. on Thursday.
According to a joint statement from Canada and the U.S. sent Friday from Global Affairs Canada, the two countries have agreed to drop the exchange of tariffs within 48 hours, as well as terminating any World Trade Organization litigation underway in relation to the trade action under section 232 of the U.S. Trade Expansion Act. Canada had pursued the WTO legal avenue after condemning the U.S. tariffs as "punitive," and "an affront" to Canada-U.S. relations.
With the tariffs being lifted, the issue of ratification is now set to take centre stage. U.S. Vice-President Mike Pence says he will be travelling to Canada on May 30 to meet with Trudeau to discuss advancing the trilateral trade pact "as swiftly as possible."
The Americans have been pushing for the deal to be solidified in order to eradicate the current NAFTA deal, which remains in place until its replacement is ratified.
Trudeau called it a "good day for steel and aluminum workers right across the country." The agreement comes after indications that talks were moving in a positive direction between Canadian and U.S. officials over the last few weeks, but also at a time when U.S. President Donald Trump appears to be readying for an intensified trade fight with China.
"It's very much tied up I think in the breakdown of talks between the United States and China… We've got so many moving parts, they're all interrelated and finally the stars aligned so that we could get this breakthrough deal," said Chris Sands, director of the Center for Canadian Studies in Washington, D.C.
The prime minister said that the financial assistance that the Liberals had introduced to help offset the impacts of the tariffs will remain, and thanked unions and workers for their support and faith in pushing for a full lift of the tariffs over any sort of quota or other concession.
The deal to drop the tariffs is connected to an agreement related to measures to restrict the dumping of cheap steel, like what comes in from China and Russia, into the North American market.
"The United States and Canada will implement effective measures to: prevent the importation of steel and aluminum that is unfairly subsidized and/or sold at dumped prices; and prevent the transshipment of steel and aluminum made outside of Canada or the United States to the other country. Canada and the United States will consult together on these measures," the statement says.
The two countries will also be setting up a process to monitor steel and aluminum trade between the two countries, and should there be a surge in imports of either steel or aluminum, the importing country can request consultations with the exporting country. Pending the outcome of these consultations there is a possibility of re-imposing the tariffs on the offending projects.
Sources have told CTV News that the Americans and Mexico have also reached a similar agreement. Trudeau said Canada will now work with both the U.S. and Mexico on examining the steel and aluminum market to ensure the protection of their domestic industries.
"The tariffs have had a significant effect on Canadian workers, with more than 600 layoffs in the steel sector. Additionally, new investments in our steel and aluminum sector have been put on hold or jeopardized due to the instability caused by these tariffs," said United Steelworkers National Director Ken Neumann in a statement. "Our steel sector and our workers are still at risk from predatory practices of foreign producers who flout fair trade rules and who are now shut out of other markets. It is critical that the federal government impose measures to stabilize our market and defend Canada's steel sector from these destructive practices."
This lifting comes after Trudeau and Trump spoke Thursday morning, for the third time in recent days about the tariffs. According to a readout of the two leaders' call, the pair discussed China, uranium, and the new NAFTA deal.
Trudeau said that there was not one breakthrough moment, but an ongoing series of conversations between various cabinet ministers, their U.S. counterparts, and other key stakeholders on both sides of the border that made the lift possible.
Trudeau was joined at that announcement by Foreign Affairs Minister Chrystia Freeland, Minister of Finance Bill Morneau, Minister of Innovation, Science and Economic Development Navdeep Bains, Minister of Democratic Institutions Karina Gould, Minister of Seniors Filomena Tassi, Liberal MP for Hamilton East-Stoney Creek, Ont. Bob Bratina, and Liberal MP for Sault Ste. Marie, Ont. Terry Sheehan.
Freeland, who got a special shout out in the prime minister’s news release on the tariffs, said on CTV's Power Play that the outcome was the result of a "team Canada approach," similar to the push that helped get the new NAFTA deal done.
"We are now going to move ahead with our own ratification," Freeland said. "And I hope that we'll get support from all parties in the House."
Speaking with reporters in Ottawa just as the news was breaking, Conservative Leader Andrew Scheer said he’d have to look at the details of the deal, but criticized Trudeau's handling of the NAFTA talks and for not getting the tariffs lifted sooner.
His deputy, Conservative MP Lisa Raitt, told CTV News that it’s now important to make sure that the tariffs stay off. "We have to make sure that we keep lines of communication open so that we don't have the kind of pain that was inflicted upon Canadian companies in the last 12 months," Raitt said.
NDP trade critic Tracey Ramsey told CTV News that her party is pleased that the "punishing" chapter is in the past, and said that money collected from the tariffs should go back to the sector to help steel and aluminum companies to rebuild and enhance their industries.
"There's still a lot of work to be done," she said.
Tariffs leveled last May
The tariffs were imposed on both Canada and Mexico by U.S. Secretary of Commerce Wilbur Ross last May in the midst of NAFTA talks, citing national security concerns as their justification.
Canada responded with its own dollar-for-dollar countermeasures on American steel, aluminum, and a surtax on other goods such as coffee, prepared meals, pizza, chocolate, condiments, toiletries, beer kegs, whiskies, various household items, and motorboats.
At the time Freeland called it the "the strongest trade action Canada has taken in the post-war era."
The U.S. tariffs were a 25 per cent steel tariff and 10 per cent tariff on aluminum, while Canada's countermeasures amount up to $16.6 billion in imports of steel, aluminum, and other products from the Unites States, subjected to either a 25 or 10 per cent surtax.
When a renegotiated deal was signed after nearly 14 months of negotiations, the tariffs remained in place. This prompted criticism from the opposition for not resolving the damaging trade action before inking the deal. Canadian officials have said these retaliatory measures would be lifted the minute the Americans dropped their tariffs.
Freeland was in Washington, D.C. earlier this week where she met with U.S. Trade Representative Robert Lighthizer and others to discuss the tariffs, among other issues.
Momentum to ratify?
The tariffs have remained a key sticking point in the process of ratification of the renegotiated NAFTA deal called the United States-Mexico-Canada Agreement, or USMCA in America, and the Canada-United States-Mexico-Agreement, or CUSMA, here. Canada has said that the deal will not be ratified so long as the tariffs are in place.
Last month Canada's Ambassador to the U.S. David MacNaughton said in D.C. that the tariffs were poised to become an election issue if they were still in place by the time the fall federal election campaign kicked off.
He also cast doubt on the prospect of Trudeau recalling Parliament after it adjourns in June to deal with ratifying the new deal, though he said that if the tariffs were lifted, "I would expect that the government would introduce legislation fairly soon thereafter."
As things stand, time is diminishing on the possibility of the text of the deal passing through both the House and the Senate given the amount of movement that would have to happen across North America over the next five weeks.
That's when Parliament rises for the last time before the October election will be called. Among the other obstacles yet to overcome: In the U.S. Democrats have said that the deal without changes won’t have their vote, nor will they allow a vote in Congress until Mexico changes its labour laws.
Speaking hypothetically, MacNaughton said that should the momentum be there, "it's not beyond the bounds of possibility" that Trudeau could bring MPs back if he wanted to.
"How Parliament deals with that, how the opposition will deal with it, and then of course it's got to go to the Senate, but I think there'd be a fair bit of pressure on members of parliament to pass it, to create some certainty in terms of the investment climate," he said.
At an event in the U.S., Trump re-stated his desire to have Congress approve USMCA quickly.
"And then great farmers and manufacturers and steel plants will make our economy, even more successful than it already is, if that's possible, which it is possible," Trump said.
Canadian American Business Council CEO Maryscott Greenwood said she is optimistic about ratification, at least in the United States.
"I'm optimistic that it can get ratified in congress this summer, maybe even next month. The reason is the economy remands it… Democrats in Congress as well as Republicans understand how important this deal is and so there could be some negotiation with Speaker [Nancy] Pelosi," Greenwood said.
"Now it's time to ratify and I’m really optimistic based on the Democrats that I talk to in congress, that there is a path to ratification next month."
With files from CTV News' Joyce Napier and Michel Boyer
