Canada, U.S. Reach Deal to End Steel and Aluminum Tariffs

The nearly year-long tariff war between Canada and the U.S. is over. On May 17, Canada, Mexico, and the U.S. announced plans to end steel and aluminum tariffs.

The deal applies to the tariffs the U.S. imposed last June. Canada has long argued last summer’s tariffs were illegal. As part of the deal, the Trudeau government has agreed to end its legal challenge against the U.S at the World Trade Organization on the section 232 tariffs.

The deal also includes:

  • A monitoring system to watch out for any potential surges in the metals markets.
  • A commitment to stop the importation of aluminum and steel that is unfairly subsidized or sold at ‘dumped’ prices.
  • A promise to prevent the transshipment of aluminum and steel made outside of Canada or the United States to either country.

Tariffs may be re-imposed if the principles of the agreement are not upheld.

The tariffs have disrupted supply chains and added extra costs for consumers and businesses across a wide range of industries on both sides of the border. They were also becoming an obstacle to ratifying the new North American free trade pact. The end of the steel and aluminum tariffs increases the chances of all three parties passing the United States-Mexico-Canada Agreement (USMCA).

“This decision reflects what is known to be true by friends on both sides of the border: Canada has been America’s most steadfast ally for more than a hundred years, and our long-standing partnership and closely linked economies make us more competitive around the world and improve our combined security,” said Prime Minister Justin Trudeau.

“With this decision, Canadian and American businesses can get back to what they do best, working constructively together to the benefit of our economies, our people, and our communities.”

Next on the agenda is the USMCA. Ottawa is set to soon introduce legislation to ratify it. Time is short, as the House of Commons and the Senate rise in late June ahead of the fall election. US VP Mike Pence was in Ottawa on May 30 to press the urgency.

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