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March 4, 2019

Section 232 Tariffs Threaten USMCA As U.S. Launches Another Probe Into Canadian, Mexican Steel Imports

U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau had a conversation last week about their standoff on steel and aluminum tariffs. While any discussion is possibly a positive step, according to Reuters there was “no progress” during that conversation. That news came after Canadian officials threatened not to ratify the United States Mexico Canada Agreement until the United States lifts its steel and aluminum tariffs on Canadian imports.

U.S. Senate Finance Committee Chair Charles Grassley (R-Iowa), whose committee oversees trade policy in the Senate, essentially made the same argument as Canadian officials did last week. According to Politico, Chairman Grassley told U.S. Commerce Secretary Wilbur Ross last Thursday that removal of the steel and aluminum tariffs on Canada and Mexico “would greatly help USMCA get through Congress.” U.S. Trade Representative Robert Lighthizer said the Trump administration is working on a deal. He told lawmakers at a hearing this week that “The president wants me to get some kind of steel agreement if I can with Canada and Mexico” because “If USMCA doesn’t pass, it would be a catastrophe across the country.”

The Mexican government also was engaged in this debate last week. In an interview with Reuters, Deputy Economy Minister Luz Maria de la Mora promised that if the U.S. government does not repeal its Section 232 steel and aluminum tariffs, her government would impose new duties on U.S. products in the next month or two. (The Mexican government already has put in place tariffs on U.S. agricultural products in retaliation for the Section 232 penalties.)

In related news that could further exacerbate tensions between the three countries: the United States also announced last week that it had opened an anti-dumping probe into fabricated structural steel imports from China, Canada, and Mexico. The American Institute of Steel Construction Full Member Subgroup petitioned for the suit.

The alleged dumping margins are 30.41 percent for Canada, 222.35 percent for China, and 30.58 percent for Mexico. Imports of fabricated structural steel from Canada, China, and Mexico were valued at about $658.3 million, $841.7 million, and $406.6 million respectively. The U.S. International Trade Commission (ITC) is scheduled to make its preliminary injury determinations on or before March 21, 2019. Click here to read the U.S. Commerce Department’s full announcement.