Prospects have brightened for a new North American trade deal with President Donald Trump lifting steel and aluminium tariffs on Canada and Mexico that were placed almost a year ago in the name of national security.
The move will lift the 25% steel and 10% aluminium tariffs the United States placed on the two trading neighbours and sparked tit-for-tat duties from Canada and Mexico on US farming goods and other products.
Getting rid of the tariffs is viewed as a key hurdle to approval for the US-Mexico-Canada Agreement (USMCA) trade deal, which was signed in 2018. It replaced the North American Free Trade Agreement.
According to analysts, Trump’s tariff was the sticking point in the trading relationship among the three nations, who were finding it difficult to ratify USMCA.
Canada and Mexico had vowed not to move ahead with USMCA as long as they were in place. And several members of Congress had also raised objections.
That situation has now changed with Canada saying it will lift retaliatory duties on US products as part of the deal, which will take effect within two days. Mexico is also expected to follow suit.
The Canadian and Mexican governments, along with top US lawmakers, have pushed the Trump administration to remove the tariffs before the countries approve the United States- Mexico-Canada Agreement.
At a recent joint meeting of the North American countries, they agreed on monitoring and enforcement mechanisms to prevent steel dumping that might affect prices.
The announcement came a day after the Trump administration announced it would delay a decision on imposing new tariffs on foreign automobiles, in part because it said it was working to negotiate new trade agreements with Japan and the European Union.
Taken together, the two moves amount to attempt to ease global trade tensions at a moment when markets and investors are still reeling from Trump’s decision to apply new tariffs on China after trade negotiations with Beijing collapsed last week, according to CNN. China has said it would retaliate with its own escalated tariffs on US exports.
The White House’s recent escalation of a trade war with China rattled investors and raised concerns about damage to businesses and consumers.
European Union steel and aluminium exports to the US are still subject to the tariffs, but there has been some good news for trade relations between the two - on Friday President Donald Trump delayed a decision on whether to impose levies on cars and car part imports.
“The White House has put back the decision by six months to allow more time for trade talks with the European Union and Japan,” a BBC dispatch showed.
Tariffs of up to 25% on imported cars and car parts were under consideration.
A report by the US Commerce Department claimed that imports of foreign-made cars and auto parts into the US were a threat to national security.
Generally, American farmers and manufacturers are seeing the tariff lifting positive to the US economy, as it will help businesses grow and exports surge, which are crucial to the world’s largest economy.
