US lifts steel, aluminum tariffs on Canada, Mexico

UPDATE: May 17, 2019: On Friday afternoon, The United States Trade Representative issued a statement confirming the U.S. tariffs and all retaliation from Canada and Mexico would cease. The statement called the agreements "great news" for the steel and aluminum industries and for American farmers affected by retaliatory tariffs.

Dive Brief:

The Trump administration will lift tariffs on imported steel and aluminum from Canada and Mexico, according to a joint statement by Canada and the U.S. and multiple media reports. The tariffs will end within 48 hours of the statement.
Canada said it will remove retaliatory tariffs imposed in response to U.S. steel tariffs. Though the Mexican joint statement was not released in time for this report, it is also expected to end all retaliatory tariffs.
Canada and Mexico have agreed to upgrade their enforcement measures to keep cheap Chinese steel from flowing through those countries into the U.S. market.

Dive Insight:

The 25% tariffs on Canadian and Mexican steel and 10% on aluminum, in place since March 2018, were major barriers to the ratification of the United States, Mexico and Canada Agreement (USMCA), which Trump called his number one priority for 2019.

Now Republicans like Sen. Chuck Grassley, R-Iowa, who fiercely opposed the tariffs but would otherwise support the president, will be able to jump on board. Grassley objected to the retaliatory tariffs placed on American farmers by Mexico.

Earlier this month Mexico passed a new labor law, which U.S. labor unions and Democrats considered crucial to the USMCA's fate. Apart from what may turn into further pushback from Democrats and labor unions on the enforcement of Mexico's new law, with steel tariffs gone, the major USMCA deal breakers are gone and the deal is miles closer to passage.

Industry executives earlier this year expressed confidence the tariffs would be replaced by import quotas, but today's announcement lays those fears to rest.

The announcement marks a cooling of tensions between the U.S. and some of its trading partners. Also today, the Trump administration agreed to delay a decision regarding taxing European and Japanese auto imports for 180 days after threatening to levy new tariffs Wednesday. Meanwhile tensions remain high between the U.S. and China.