Trump extends exemption for Canada, Mexico on steel and aluminum tariffs

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U.S. President Donald Trump is granting Canada and Mexico a “final” one-month break from his tariffs on steel and aluminum – and demanding that both countries agree to quotas that would limit Canadian and Mexican exports of the metals to the U.S.

Mr. Trump issued proclamations around 9 p.m. Monday extending the tariff exemptions to June 1.

The President announced levies of 25 per cent on all imports of steel and 10 per cent on aluminum in early March, but granted temporary exemptions to several U.S. allies. The exemptions were due to expire Tuesday.

In the case of Canada and Mexico, Mr. Trump threatened to impose the tariffs if the two countries did not agree to a renegotiated North American free-trade agreement. Top officials from the three countries are scheduled to reconvene in Washington next week for further negotiations.

The U.S. has granted a permanent exemption to one country, South Korea, after it agreed to limit the amount of steel it sends to the United States. The European Union also received a one-month extension to its exemption Monday, while Brazil, Argentina and Australia received indefinite exemptions, pending negotiations with the U.S.

In a press release Monday, the White House said the newly extended exemption for Canada, Mexico and the EU would be the last.

“In all of these negotiations, the Administration is focused on quotas that will restrain imports, prevent transshipment, and protect the national security,” the release said.

Adding steel and aluminum quotas to the NAFTA bargaining table would insert another tough subject into an already fraught negotiation.

In NAFTA talks, the U.S. is currently demanding more stringent rules on the continental auto industry with the goal of stopping companies from sourcing parts from countries outside the NAFTA zone and driving auto jobs away from Mexico and back to the United States.

The Trump administration has also proposed tough new measures to limit the amount of U.S. government contracting Canadian and Mexican firms can bid on, a gutting of NAFTA’s dispute resolution system and dismantling Canada’s protectionist supply-management system for milk, eggs and dairy.

Still, Canada’s steel industry welcomed the news Monday evening.

“We are happy with the extension and looking forward to discussions with the U.S. on what a full, permanent exemption - which would benefit businesses and employees on both sides of the boarder - would look like,” said Joseph Galimberti, president of the Canadian Steel Producers Association.

The steel and aluminum tariffs are mostly aimed at keeping cheap Chinese steel from flooding the U.S. market, but would disproportionately hurt Canada, which is the U.S.’s largest supplier. Prime Minister Justin Trudeau promised last week to spend more money on more rigorous border inspections to stop foreign steel and aluminum from circumventing U.S. tariffs by passing through Canada – a bid to win over Washington by showing Ottawa is serious about helping Mr. Trump fight overseas imports.

The President is using national security as the grounds for the tariffs, arguing that the U.S. needs to beef up its domestic industry so it does not have to rely on foreign countries for the metal to build its tanks and ships. But Ottawa has argued that, as a long-time U.S. ally, it poses no threat at all.

At an event at the Canadian embassy in Washington last week, ambassador David MacNaughton said that Mr. Trump’s officials in the office of the U.S. trade representative have even privately admitted to him that Canada is not the target of the tariffs – even if it risks getting hit hard.

“USTR people keep saying to me ‘Well, you know, we’re not really trying to get at you. We’re trying to get at some of the, you know, in the far east,’” he said. “And I say, ‘Well, why are you punching me in the nose, then, if you’re trying to get at them?’”