The US will lift the 25 percent tariff on steel imports and 10 percent tariff on aluminum President Donald Trump imposed against Canada back in late May 2018 while Canada will, in turn, remove all retaliatory tariffs it levied against the American goods, the statement said, adding that all the tariffs will be gone in two days.
The two nations also vowed to take measures to prevent the imports of steel and aluminum that is “unfairly subsidized” or “sold at dumped prices” as well as prevent the “transshipment of steel and aluminum” produced in third countries to one another. They also agreed to create a special monitoring mechanism to promptly detect import “surges.”
The agreement also allows each side to impose a 25 percent tariff on steel and 10 percent tariff on aluminum if it faces a surge in their imports, which is “meaningfully beyond historic volumes.” However, such a measure can be taken only after consultations with the other side. The move would also give the affected party a right to retaliate – but only in the affected sector, the document said without specifying the details.
A similar deal was struck with Mexico, President Donald Trump said in a speech on Friday.
Canada’s Prime Minister Justin Trudeau called the tariffs the biggest obstacle to the ratification of the United States–Mexico–Canada Agreement (USMCA), which is expected to supersede the previous deal between the three nations known as the North American Free Trade Agreement (NAFTA). USMCA was signed back in November 2018 but has not yet been ratified.
Washington slapped Canada and Mexico, as well as the European Union, with tariffs after it failed to win concessions from its allies and trading partners in May 2018. At that time, Trump said that the US had been unfairly treated in trade with its neighboring and overseas partners.
The move soured relations between the allies as Canada implemented retaliatory tariffs matching the values of the US’ ones dollar-for-dollar and covering almost 300 US goods, which aside from steel and aluminum included inflatable boats, yogurt, whiskies, candles, and sleeping bags.
The EU also struck back by imposing its own tariffs against the US on American goods worth $3.13 billion, including bourbon whiskey, motorcycles and orange juice that are still in place.
Reconciliation between the US and Canada also comes amid Washington’s ongoing trade war with China. On Friday, it was reported that US trade talks with Beijing stalled once again. Earlier in May, Trump said that he would soon hike American tariffs on $200 billion worth of Chinese goods.
According to some reports, the agreement between Ottawa and Washington, aimed at preventing imports of steel and aluminum from third countries, is targeting China in particular by seeking to prevent the flow of cheap Chinese metals to the US.