March 18, 2019

Will U.S. End Section 232 Tariffs For Canada And Mexico?

The Trump administration reportedly is exploring ending the Section 232 steel and aluminum tariffs that are currently imposed on imports from Mexican and Canadian and replacing them with quotas.

In testimony before the U.S. Senate Finance Committee last week, U.S. Trade Representative Robert Lighthizer said, “What I’m trying to do is a have a practical solution to a real problem … get rid of tariffs on these two, let them maintain their historic access to the U.S. market which I think will allow us to still maintain the benefit of the steel and aluminum program.” In a separate hearing later in the week before the committee, U.S. Treasury Secretary Steve Mnuchin reiterated Lighthizer’s comments. Lighthizer also suggested, however, that the United States wouldn’t simply eliminate the tariffs, but would replace them with quotas.

The Mexican government did not react well to that notion. An unnamed official reportedly said, “Our position is that we should not have tariffs or quotas.” It’s likely that the U.S. Congress also wouldn’t go along with that plan. Several Democrat and Republican House and Senate lawmakers have indicated they will not support the United States Mexico Canada Agreement (USMCA), which would replace North American Free Trade Agreement, until the Section 232 tariffs are removed on products for North American trading partners.

That list of lawmakers includes Senate Finance Chair Charles Grassley (R-Iowa), whose committee oversees trade policy in the upper chamber. In a speech on the Senate floor last week, Sen. Grassley said, “I would ask the president to consider moving this as fast as he can and get off this business of negotiating trade and tariffs for quotas because that’s not much better for the United States or not much better even for the Canadians.”

Despite the concern about the tariffs on Canadian and Mexican products, lawmakers are happy with the Trump administration’s engagement with Congress on the USMCA. Rep. Rosa DeLauro (D-Conn.) said, “We’ve had more conversations with the ambassador [Lighthizer] than we had with either the Clinton or Obama representatives” on previous trade deals.