Trump Government Exempts Mexico, Canada from Steel, Aluminum Tariffs

By Navarro, Carlos | SourceMex Economic News & Analysis on Mexico, March 14, 2018 | Go to article overview

Trump Government Exempts Mexico, Canada from Steel, Aluminum Tariffs


Navarro, Carlos, SourceMex Economic News & Analysis on Mexico


Mexico and Canada received a reprieve from US President Donald Trump's decision, made known in early March, to impose tariffs on steel and aluminum imports. Canada accounts for 16% of US steel imports, while Mexico's share is about 9%. Trump eventually moved to exempt Mexico and Canada from the taxes, at least for now.

Trump, however, did not discount the possibility that he could impose the tariffs on the two countries--partners with the US on the North American Free Trade Agreement (NAFTA)--if the ongoing NAFTA negotiations prove unsatisfactory for his administration. "We're going to hold off the tariff on those two countries to see whether we can make the deal on NAFTA," the president said at a signing ceremony to enact the tariffs, which amount to a 25% levy on steel and 10% on aluminum.

Mixed results for seventh round of NAFTA talks

The president's announcements came on March 5, at the conclusion of the seventh round of NAFTA talks, which US Trade Representative Robert Lighthizer described as mixed. In comments to reporters at the conclusion of the talks in Mexico City, Lighthizer said it was regrettable that negotiators had only managed to complete discussions on three of the areas under review.

At the same press conference, Mexico's Economy Secretary Ildefonso Guajardo, who is leading his country's negotiating team, offered a more positive spin on the talks, saying that the three countries had reached agreement on several areas. NAFTA negotiators have had difficulty finding common ground because of the US insistence on including protectionist measures, which the Trump government says would reduce a trade deficit with Mexico and Canada (SourceMex, Aug. 23, 2017, Oct. 18, 2017, Jan. 31, 2018).

The three countries are scheduled to resume negotiations in early April, probably in Washington, DC. To expedite the process, a series of working meetings involving cabinet officers will be conducted before the eighth round of talks, Guajardo said.

According to Guajardo, the three countries would like to conclude the negotiations as soon as possible to avoid the presidential and congressional elections in Mexico in July and the US mid-term congressional elections in November.

The seventh round of negotiations occurred in an atmosphere of tension between the US and Mexico. Trump had intended to travel south of the border before the talks to meet with Mexican President Enrique Pena Nieto, but the meeting was canceled abruptly following a telephone conversation between the two leaders to discuss the agenda (SourceMex, Feb. 21, 2018). According to sources, Pena Nieto angered Trump when he urged the US president to make a statement asserting that the US would not force Mexico to pay for construction and expansion of a wall along the US-Mexico border.

"The NAFTA talks looked promising until last week, when Donald Trump exploded over the phone at Mexican President Enrique Pena Nieto about the border wall," columnist David A. Andelman wrote on CNN.com "Both presidents stood firm on their positions; Pena Nieto said Mexico won't pay for the wall, while Trump insisted that it would, culminating in, as one Mexican official told TheWashington Post, Trump losing his temper."

Instead of traveling to Mexico, Trump sent a delegation led by his son-in-law, Jared Kushner, who brought a message to the Mexican president. "Kushner's hasty visit came in an atmosphere of high tension," columnist Raymundo Riva Palacio wrote in the daily business newspaper El Financiero. "In the two-and-half weeks before the visit, NAFTA negotiators met in an atmosphere of conflict. The situation was aggravated by the announcement that the US would impose tariffs on all imports of steel and aluminum."

The tensions with Mexico and Canada were eased somewhat when Trump decided to exclude the two countries from the tariffs.

Industry chambers concerned

Before the exclusion of Mexico and Canada, strong protests came from industry groups and government entities. …

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