Canada and the USA have reached an agreement that will bring an end to a nearly year-long trade war between the two countries, according to multiple sources.
In March 2018, citing national security concerns, the Trump administration imposed tariffs of 25% on steel and 10% on aluminum imported from most other countries; in June he extended this tariff to include Canada, the EU, and other traditional allies. Simultaneously the US opened up NAFTA for renegotiation with Canada and Mexico. In retaliation, Canada slapped tariffs of 10% and 25% on about $16 billion worth of goods exported to the US – including both metal products and consumer goods.
According to Global Affairs Canada, in 2017 the Canadian steel industry employed more than 23,000 Canadians and contributed $4.2 billion to Canada’s GDP, while the Canadian aluminum industry employed 10,500 workers contributing $4.7 billion to Canada’s GDP. “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.
The tariffs also reflected a serious obstacle to the ratification of the new free trade deal between the two countries as well as Mexico, according to Prime Minister Justin Trudeau, who called this a “good day for steel and aluminum workers right across the country.” The CBC quotes a “senior source” in the government as noting that Donald Trump was looking for a win on trade in the face of his ongoing trade dispute with China. The new USMCA can now move forward, potentially providing that win.
As part of the deal, Canada will drop its participation in a multilateral complaint to the WTO over the US tariffs, which Canada argued are inconsistent with the GATT rules and not justified by the “national security” exception. A panel has been established and other targets of these tariffs – including the EU and China – can be expected to continue the complaint.
