May 6, 2019

White House, GOP Still At Odds On Section 232 While Canada Makes Tariff Changes

Last week, U.S. Senate Finance Committee Chair Charles Grassley (R-Iowa) reiterated his stance that the Trump administration must lift its Section 232 steel and aluminum tariffs before federal lawmakers, including Republicans in Congress, are willing to consider the United States Mexico Canada Agreement (USMCA).

Sen. Grassley, who has outlined this position on an almost weekly basis over the last few months, also penned an op-ed in The Wall Street Journal, that made this argument. Sen. John Cornyn (R-Texas), also addressed the issue last week, saying “I don’t think there are going to be 51 votes to pass [the USMCA] with the tariffs still outstanding.”

In a television interview, U.S. Commerce Secretary Wilbur Ross indicated the Trump administration has no plans to lift the trade penalties, but might be convinced to replace the tariffs with quotas. On Wednesday he told Fox Business, “The president is not going to take tariffs off unless there are other things that protect national security … There are other ways to solve that problem and there have been serious discussions with both Mexico and Canada about alternative routes.”

As Connecting the Dots has noted in the past, not only are lawmakers in Congress unlikely to agree to quotas, policymakers in Canada and Mexico are opposed to the idea as well. Meanwhile, House Speaker Nancy Pelosi (D-Calif.) said the USMCA will not get a vote in the lower chamber without addressing Democrats’ concerns about enforcement, labor and environmental and pharmaceutical provisions in the actual text of the deal. The Trump administration has said it is unwilling to alter the agreement.

While policymakers in the United States debated the Section 232 tariffs, the Government of Canada announced that, effective last Monday, April 29, it had discontinued its 25 percent tariff on imports of concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel and wire. The government, however, also announced it will implement definitive safeguard measures on imports of heavy plate and stainless steel wire that the Canadian International Trade Tribunal previously found has caused or threaten to cause injury to domestic steel producers.