In a joint statement released on Friday, the United States and Canada announced that Washington will drop their tariffs within 48 hours in a move applied to both Canadian and Mexican products, a move that will allow a new trade pact to move forward.
Reports started to pour in after U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau discussed the tariffs earlier on Friday, according to the Prime Minister’s Office.
Ratification of the USMCA, the replacement to the 25-year-old North American Free Trade Agreement,would have been difficult without the tariffs being removed in at least the Canadian House of Commons and the U.S. Congress.
The two leaders spoke “about Section 232 tariffs on steel and aluminum, and Canada’s retaliatory tariffs,” Cameron Ahmad, Trudeau’s communications director, said in a statement, adding that China, uranium, and the USMCA were also discussed.
It will be considered a win for the ruling Liberal Party who are headed into a federal election consistently falling behind the opposition Conservatives in national polling ever since a political affair around a construction firm rocked Ottawa.
Trudeau said the agremenet with Washington to drop tariffs did not cowm from a “breakthrough” moment but due to a lot of conversations and hard work by Canadian cabinet ministers while at an event for steel workers in Hamilton.
“It didn’t make a lot of sense to continue to have steel and aluminum tariffs on products that move between our two countries.”
President Donald Trump had imposed the global “Section 232” tariffs of 25 per cent on steel and 10 per cent on aluminum in March 2018 on national security grounds, invoking a 1962 Cold War-era trade law.
Both Canada and Mexico argued for 14 months that their metal industries posed no security threat as their economies are intertwined with the United States, and challenged the tariffs before the World Trade Organization.
‘Pure good news’
The news that the U.S. had dropped their tariffs came as welcome news for Prime Minister Justin Trudeau at a time when positive headlines for Liberals have been so few and far between.
“This is just pure good news for Canadians,” Trudeau told gathered media after giving a formal announcement of the deal to workers at the Stelco Holdings Inc.’s steel warehouse in Hamilton.
The company’s stocks jumped 11 per cent after the news broke while U.S. steel stocks dropped slightly, markets that were benefitting from the levies on Canadian and Mexican competition.
While Canada and Mexico were against signing the long-negotiated USMCA with tariffs still in place, members of Trump’s own Republican Party also resisted ratifying the agreement as they were impacted by Canadian and Mexican retaliation.
Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, was considered instrumental in resisting the Trump administration regarding the levies. He represents a state very reliant on the industries and tweeted his support of the “important step in USMCA”.
Grassley got what what Politico Canada editor Alexander Panetta called a “special thanks” from Foreign Affairs Minister Chrystia Freeland on Twitter, where she thanked the “many Americans who understood that 232 tariffs were hurting both the US and Canada, and who fought to have them lifted, in particular Senator @ChuckGrassley.”
The prime minister said that Ottawa would now work with Washington on the timing of USMCA ratification and said he was optimistic Canada would be “be able to move forward well in the coming weeks”, reciprocated when Vice President Mike Pence said he would meet Trudeau in Ottawa on May 30 to discuss the next steps.
A statement from the office of Mexican President Andres Manuel Lopez Obrador said the agreement to lift the tariff was “beneficial for all countries.”