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April 1, 2019

While Court Upholds U.S. 232 Tariffs, Lawmakers Threaten To Hold Up USCMA Until President Trump Eliminates Them

While on March 25, the Court of International Trade (CIT) issued a ruling that upheld the constitutionality of the U.S. president’s authority to issue Section 232 trade penalties, policymakers in Washington, D.C., Ottawa, and Mexico City continue to insist that President Donald Trump must lift the tariffs on steel and aluminum products that he has placed on imports from Canada and Mexico under the provision. (To be sure, the court challenge to the tariffs also is not over. The steel importers who brought the challenge have said they will launch an appeal.)

As Connecting the Dots has reported previously (here and here), lawmakers in the United States have said they might not consider the United States, Mexico, Canada Agreement (USMCA) until the Trump administration lifts or eases its Section 232 penalties on imports of Canadian and Mexican steel and aluminum.

Senate Finance Committee Chair Charles Grassley (R-Iowa), whose committee oversees trade policy in the U.S. Senate, has led the effort to get President Donald Trump to reconsider the penalties. According to The Washington Post, Chair Grassley raised the issue again last week in a meeting with the president and the president, reportedly, “refused to budge.” The senator remained firm, however, telling The Post, “The tariffs are going to come off because the president has a good agreement … It’s just a matter of his realizing that nothing’s going to happen until the tariffs go off. And so the tariffs come off if he wants to get a win.”

Top Canadian officials also doubted their parliament would approve the USMCA without action on the Section 232 tariffs by the White House. Canadian Foreign Minister Chrystia Freeland said, “The existence of these tariffs for many Canadians raises some serious questions about NAFTA ratification” and that, “in order to move ahead with that deal, Canadians feel the right thing is there should be no 232 tariffs or retaliatory measures between our two countries.” David MacNaughton, Canada’s ambassador to the United States, echoed Freeland’s statements. He said, “I don’t want to sound threatening, because that is not helpful, but practically speaking, we have an election coming up in Canada. It will be extraordinarily tough if steel and aluminum tariffs are in place.”

Canada’s CBC has cited at least two sources who have suggested that Prime Minister Justin Trudeau also is considering adding new retaliatory tariffs on U.S. products, or increasing current ones, if President Trump doesn’t revoke the Section 232 tariffs for North American trading partners.

Meanwhile, according to Politico, Mexico’s former chief NAFTA negotiator, Kenneth Smith Ramos, said that while his country’s preference is to lift the tariffs completely, if that’s “not possible,” leaders there would accept quotas. Deputy Economy Minister Luz Maria de la Mora had a different take, however. According to a separate Politico story, he said “quotas make no sense” and argued “what industry in North America needs is the elimination of this tariff.”