The three largest countries in North America announced an end to the 11-month battle of tariff and retaliatory tariff that pinched U.S. farm exports to Canada and Mexico, the two largest customers in the world for the goods. The agreement improved the prospects for ratification of the new NAFTA and altered the dynamics of the Sino-U.S. trade war.
“This agreement is great news for American farmers that have been subject to retaliatory tariffs from Canada and Mexico,” said the U.S. trade representative’s office. The United States said it would remove tariffs on steel and aluminum from Canada and Mexico and the U.S. neighbors said they would remove retaliatory duties on U.S. products including food and agriculture. “We’ll be selling our product into those countries without the imposition of tariffs or major tariffs. Big difference,” said President Trump on Friday. “And hopefully Congress will approve the USMCA (United States-Mexico-Canada Agreement) quickly.”
Trump signed a proclamation on Sunday to remove the U.S. tariffs today at 12:01 a.m. ET.
U.S farm groups, which became increasingly vocal against the tariffs as time passed, applauded the agreement. The National Pork Producers Council said hog farmers lost $12 per head due to the tariffs. The National Association of Wheat Growers said the end of the metals tariffs removed a barrier to USMCA. Some lawmakers said they would not vote for the pact as long as tariffs were in place. Other obstacles remain.
With the North American dispute off the table, Trump will be able to focus more closely on China, where the tariff war escalated in the past week. The Canadian news site iPolitics said that U.S. willingness to strike a deal with Canada became more obvious as the dispute with China intensified, according to unnamed senior government sources. “The idea was simple: Why fight more than one battle,” said iPolitics.
For months, Trump administration officials sought to replace the tariffs with quotas on metal imports. Canada and Mexico adamantly opposed the idea and in the end, it was dropped. The nations agreed that if imports spike, the United States can impose tariffs again and that Mexico and Canada would limit retaliation to the metals sector.
The export-promoting U.S. Wheat Associates asked the administration to remove metals tariffs on nations outside North America and said it opposed tariffs on autos, a possibility since the White House has ordered negotiations on the subject. Auto tariffs could affect Japan and the EU, both of which are major customers for U.S. food and ag exports. “New tariffs would encourage our trading partners to retaliate against U.S. farmers and agricultural exports and further weaken international trade rules,” said U.S. Wheat.