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Long-awaited end to Canada's tariff standoff with USA finally at hand

18 May 2019

U.S. President Donald Trump's administration agreed Friday to drop its punitive and controversial tariffs on Canadian steel and aluminum, ending a bitter dispute between historic allies and removing a key obstacle to ratifying the new North American trade pact.

The two nations also vowed to take measures to prevent the imports of steel and aluminium 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.

The countries could also reimpose the tariffs if they faced a "surge" in steel or aluminum imports.

However, there are signs that opposition may be dwindling: House of Representatives Speaker Nancy Pelosi, widely seen as holding the fate of the agreement in her hands, sent positive signals about her party's desire to "get to Yes" after a "productive meeting" earlier this week with U.S. Trade Representative Robert Lighthizer.

At the time Freeland called it the "the strongest trade action Canada has taken in the post-war era".

The tariffs have stood in the way of getting Trump's new North American trade deal approved by Congress, and ratified in Canada and Mexico.

Passenger cars are now subject to a 2.5 percent USA tariff but Trump has threatened to raise that to 25 percent, arguing that the European Union and other countries have higher barriers to US auto exports.

"But it looks like some sense of sanity has prevailed in the White House at long last, helped along the way by huge pressure from the US private sector that found these surcharges to be very hurtful".

Trump's proclamation said "domestic conditions of competition must be improved by reducing imports" and said a strong us auto sector is vital to usa military superiority. "Canada and the United States will consult together on these measures", the statement says.

The administration argues that US automakers' declining share of the domestic market coupled with foreign trade barriers is eroding USA innovation.

In addition, the two countries have agreed to terminate all pending litigation between them, in the World Trade Organization regarding the same actions. "As previously reported, the USA and Mexico were near resolution of the Section 232 tariffs in November 2018 only to have the president reject the deal".

But Canada has stood firm with the US on one key, related point: it has steadfastly refused to agree to quotas or other limits on its exports in order to get the tariffs lifted.

The U.S. accuses Beijing of stealing trade secrets and forcing American companies to hand over technology in a head-long push to challenge American technological dominance.

Mexican chief trade negotiator Jesus Seade likewise tweeted that the lifting of tariffs "clears the way towards ratification of USMCA".

This returns Canada and the U.S.to a fair and just steel trade position within a fully integrated North American market.

The Center for Automotive Research warned in a report past year that Trump's proposed tariffs would add up to $6,875 on average to the price of a vehicle and put hundreds of thousands of jobs in the sector at risk. Toyota, Hyundai-Kia, Subaru, Honda and others have significant research centres in the U.S.

Cameron spoke to President Trump about a deal to end the tariffs around midday, according to Cameron Ahmad, Trudeau's director of communications.

Unlike his confrontation with China, Trump is virtually alone in favoring tariffs on all imported cars.

"We have always said we are not the problem and that USMCA wouldn't pass as long as the tariffs were in place".

Long-awaited end to Canada's tariff standoff with USA finally at hand