Donald Trump is set to offer Canada and Mexico temporary exemption from steel tariffs, according to government officials. The proposal is expected to be submitted and passed today and these two countries could be exempted for 30 days. These benefits could be extended depending on the progress of the negotiations of the North America Free Trade Agreement (NAFTA).
World leaders have spoken against this tariff increase. However, Trump is seeking to show some flexibility by offering exemptions for these two nations. The U.S. President stated that this decision will “protect the steel and aluminum industries.”
Donald Trump’s tariffs: Why Mexico and Canada?
Trump explained that this flexibility will be extended only to countries that “treat us fairly on both trade and the military”. The president is trying to use the tariffs to force Canada and Mexico to offer concessions not related to NAFTA. The suggestion has explicitly referred to these two countries, specifically in the case of making concessions during the NAFTA negotiations. Donald Trump’s tariffs could change this situation.
Mexico, Canada, and the United States are currently in the seventh round of negotiations for NAFTA. This round is set to end on Monday. There have been reactions to the possible “benefits,” depending on the route taken or not taken today.
House Ways and Means Committee Chairman Kevin Brady spoke about this matter. Brady believes that Mexico and Canada should be exempted from the eventual tariffs on steel and aluminum imports. However, Peter Navarro indicated that “no country will be excluded,” since “as soon as you exempt one country you have to exempt another country.” For its part, the Department of Commerce recommended imposing general tariffs on steel and aluminum.
Donald Trump’s tariffs come from the Bush era
The U.S. went through a similar situation in 2002. During Bush’s term, Canada and Mexico were exempted from paying steel tariffs. The White House believed it would be unfair to impose these tariffs on trade partners. Economists have stated that there were negative economic impacts on the economy during that period. Even after exempting Canada and several other nations and products.
Therefore, some believe that the exemptions will not work. “I don’t think the rules of the game will change to exclude Canada from the tariffs,” Republican advisor Doug Holtz-Eakin said. “We did that under Bush. It was still the case that the damage to industries that consume steel compensated the profits for steel producers.”
Over 100 members of the House of Representatives signed a letter addressed to the White House this week. In the letters, the officials opposed President Donald Trump’s measure. The document was submitted a day before the plan was revealed.
Rep. Kevin Brady stated that the letter urged Trump to “reconsider the idea of broad tariffs to avoid unintended negative consequences.”
The order to impose these tariffs will be signed today in the Oval Office at 15:30 Washington time (14:30 in Mexico City). After the signing, it will take 15 to 30 days for the measure to come into force.