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February 11, 2019

Ontario Government Calls For End To Canada’s Retaliatory Tariffs – Then Quickly Pulls Back

Last Monday, Ontario’s Economic Development and Trade Minister Todd Smith told reporters that top officials in the province were demanding that Prime Minister Justin Trudeau immediately lift its retaliatory tariffs that the Canadian government put in place after the United States imposed penalties on all imports to steel and aluminum into its borders. Officials in Ottawa quickly responded with Economic Development Minister Navdeep Bains issuing a statement that argued the “call for Canada to unilaterally and unconditionally remove its counter-tariffs would equal unilateral surrender to the Americans … The reciprocal tariffs are critical to pressuring the Americans to end this dispute once and for all.”

By late in the week, Smith had backed away from the demand, arguing the United States also must lift its penalties.

On his side of the border, President Donald Trump is under increasing pressure to remove tariffs on Canadian companies. Last week, U.S. House Ways and Means Committee Ranking Member (R-Texas) reiterated his previously stated position that the White House eliminate Section 232 tariffs for Canadian and Mexican steel and aluminum imports before Congress will consider the United States Mexico Canada Agreement (USMCA) that is to replace NAFTA. Rep. Brady said, “We should be exempting fairly traded products from countries that fairly trade with us. That would be the case with Mexico and Canada. I think that many lawmakers, Republicans and Democrats, see no need in continuing those tariffs.”

According to Politico, Senate Finance Committee Chair Charles Grassley (R-Iowa) made the same argument in a meeting with Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Ambassador to the United States Martha Bárcena last Thursday. On social media the same day, Chairman Grassley called the penalties on Canada and the United States “an affront to” the relationship between the three countries.

As a reminder, in a letter sent to President Trump and Prime Minister Trudeau last September, and in previous communications (see “featured content” here), MSCI called on the two nations to remove their respective tariffs.