A week after it announced an increase on Chinese tariffs, the U.S. made some progression toward an amended North American Free Trade Agreement, lifting steel and aluminum tariffs on Canada and Mexico. Industry associations have applauded the deal, which they claim will lessen the burdens on the commercial and residential construction market.
On Friday, May 17, the U.S. and Canada released a joint statement regarding Section 232 of the Trade Expansion Act of 1962. According to the statement, the U.S. has agreed to lift steel and aluminum tariffs imposed on Canada, while Canada has agreed to lift those imposed on American goods in retaliation. The countries also “agree to terminate all pending litigation between them in the World Trade Organization,” the statement said. The U.S. and Mexico issued a similar statement.
President Donald Trump noted national security concerns when he imposed a 25% tariff on imported steel and a 10% duty on imported aluminum last year. However, American manufacturers and farmers were impacted when the countries hit back with their own tariffs.
According to the statements issued Friday, the countries planned to drop the tariffs within two days.
“The agreement provides for aggressive monitoring and a mechanism to prevent surges in imports of steel and aluminum,” reads a news release from the Office of the U.S. Trade Representative (USTR) Robert Lighthizer. “If surges in imports of specific steel and aluminum products occur, the United States may re-impose Section 232 tariffs on those products. Any retaliation by Canada and Mexico would then be limited to steel and aluminum products. This agreement is great news for American farmers that have been subject to retaliatory tariffs from Canada and Mexico. At the same time, the agreement will continue to protect America’s steel and aluminum industries.”
Aluminum Extruders Council president Jeff Henderson says the lifting of metal tariffs on Canada and Mexico didn’t go far enough in easing the burden on the aluminum industry and its customers.
“… even though this is a step in the right direction, until all tariffs on imported primary aluminum products are lifted, and the focus is placed squarely on the Chinese aluminum industry, U.S. aluminum extruders and their customers will continue to pay the highest prices in the world for necessary imported primary aluminum units,” he says.
The steel and aluminum tariffs have impacted contract glaziers since they were first implemented in March 2018. Dustin Anderson, president of Anderson Glass in Waco, Texas, commented about how his company had been impacted on the anniversary of the metal tariffs’ implementation.
“We have a steel fabrication department that has seen margin numbers decline. Any inflation to the customer is always met with resistance so there has to be some fine balance in there. Either way the company is impacted negatively. Since the increase on the aluminum side is pretty universal, that price increase is also universally passed along to the consumer not hurting the current state of business but making future price increases for profitability more difficult,” he said.
Following the announcement that the tariffs would be lifted for Canada and Mexico, the Window and Door Manufacturers Association (WDMA) released a statement on the deal. WDMA president and CEO Michael O’Brien commended the administration for working with the country’s “key regional trading partners” on an agreement beneficial for Americans.
“WDMA has been urging the commerce department to consider the effects of these tariffs on the residential and commercial construction markets, along with the broader effects on North American trade,” O’Brien said. “We are pleased that they will lift these tariffs and with this hurdle cleared, ask that Congress quickly act on approving the U.S Mexico Canada Agreement (USMCA) as this agreement will ensure healthy and lasting relationships in the region.”
The USMCA would replace the North American Free Trade Agreement, and has remained in impasse since the tariffs were imposed. The passing of the USMCA has been one of Trump’s policy priorities, but in a statement released Friday, U.S. Senate Finance Committee Chairman Chuck Grassley of Iowa said the lifting of the tariffs was essential to Congress passing of the USMCA.