Rapid Policy Update (March 8th): United States moves forward with 25% Tariff on Steel and 10% Tariff on Aluminum Imports, Canada Exempted

· by Huzaifa Saeed

Thursday, March 8th, 2018: At 3:30 PM (ET), President Donald Trump signed an executive order, putting into place global tariffs of 25% on Steel and 10% on Aluminum Imports. These Tariffs were the outcome of a Section 232 of the US Trade Act investigation initiated by President Trump last year.

We were pleased to hear that Canada and Mexico were both given indefinite exemptions from the Tariffs, as stated by President Trump: “We’re going to hold off the tariff on those two countries to see whether or not we’re able to make a deal on NAFTA,” Mr. Trump said. “If we’re making a deal on NAFTA, this will figure into the deal and we won’t have the tariffs on Canada or on Mexico. … I have a feeling we’re going to make a deal on NAFTA.”

Media coverage

Advocacy Efforts (February 27th – March 8th)

On February 27th, President Trump had shared his intention to apply the Tariff on Canada and the rest of the world, despite significant integration between manufacturing supply chains in both countries, specialization of Canadian firms, military partnership and balanced trade. Our organization worked with the Canadian Chamber of Commerce network to support the advocacy efforts of Government of Canada. See here for details on our messaging and link to over 25 print, radio and television engagements.

Next Steps

We understand that negotiations between the three countries will be migrated within the ongoing NAFTA negotiation.

Here are our advocacy priorities moving forward:

  1. Permanent Exemption for Canada: While businesses were relieved by the temporary exemption on tariffs by the United States, we remained concerned by the migration of the eventual outcome of these tariffs to the NAFTA negotiations and comments by President Trump stipulating that a permanent exclusion will be conditional on unrelated negotiations on agriculture, lumber and manufacturing sectors within NAFTA. As the Section 232 tariff is justified on national security concerns under American law, any attempts to use tariffs in Steel and Aluminum as leverage within NAFTA should be unconditionally rejected.We believe there is ample evidence to support Canada’s exemption should be solely based on our integrated supply chain and ongoing military partnership.
  2. Redirected Steel Dumping: Even with an exemption, our members are strongly concerned about foreign steel that will now be re-routed into Canada. It is critical that we develop surge remedies to prevent Canada from becoming a foreign dumping market. A failure to control the entry of these products will further jeopardize the NAFTA negotiations, the prospects of a permanent exemption for tariffs and cause injuries to the local producers. In our previous advocacy efforts, we have highlighted the need to improve the resources and authority of the Canada Border Services to proactively investigate dumping scenarios, remedy investigations and a more efficient trade tribunal system. Canada needs to ensure it is protecting its borders and not allowing itself to serve as a conduit for products entering the US and that it is meeting it’s diligence requirements under the WTO and NAFTA.Filing a trade dispute is an expensive and prolonged process, several members of our Chambers have been caught up in these legal processes for years, only to see a different product being dumped or dumping re-engaged from a different country.
  3. Developing a NAFTA agenda:  Over the last week, there was a policy area where we agree with President Trump. Global Steel Overcapacity and the resulting dumping in the NAFTA market have caused ongoing injuries to local steel industries on both sides of the border. Both countries produce Steel with similar world-class labour and environmental standards, raw materials and particularly in Canada’s case, one of the cleanest electricity grids in the world.It is clear to us that the current status quo of retroactively filing tribunal cases with the World Trade Organization, reactive investigations for tariffs and remedies by our respective border agencies and proactive enforcement mechanisms are simply not working for businesses.While we are not supportive of the US negotiators using Tariffs as leverage, the NAFTA negotiations can still be an opportunity for Canadian Government work with their American counterparts and Steel industries to co-create aligned trade regulations to combat steel dumping.
  4. The inclusion of Steel within Auto Rules of Origin within NAFTA: A motor vehicle assembled within NAFTA regulations in North America can be NAFTA certified even if components include foreign steel. NAFTA regulations currently specify that 62.5% of the Parts must be of NAFTA origin, we also understand that the clause is currently under negotiation between the three countries and many of our members believe that adding Steel within the content requirement will bring greater fairness to the agreement.

Prime Minister Trudeau to visit Hamilton on March 13th

Earlier today, Prime Minister Trudeau announced that he will be visiting key Steel and Aluminum communities in Canada, with Hamilton slated for March 13th. He hopes to engage workers, labour unions, businesses and other industry representatives.  The Prime Minister’s Office is working with local Liberal MP’s to reach out to businesses in Hamilton for a roundtable. We will be presenting our concerns and recommendations at that event.

For more information, please Contact: Huzaifa Saeed | Policy & Research Analyst | Hamilton Chamber of Commerce | t: 905-522-1151 ext: 230 | e: h.saeed@hamiltonchamber.ca