Free trade supporters and internationalists got a glimmer of hope this week with U.S. President Donald Trump’s decision to lift tariffs on steel and aluminum from Mexico and Canada. So will the rest of the world please start making sense now? We can only hope!
- Trump originally imposed the tariffs in March 2018, levying a 25% tax on steel and 10% on aluminum, citing far-fetched “national security” grounds. Indeed the tariffs were at odds with economic reality: as explained by TES Contributor Dan McGroarty in an article in The Hill, for strategic and commercial reasons the U.S. and Canadian aluminum industries have been integrated since before the Second World War.
- The tariffs raised the price of steel in the U.S., forcing steel consumers to pay an extra $5.6 billion, according to Reuters. Canada and Mexico responded with retaliatory tariffs of their own, mostly targeting American agricultural goods, in a move designed to threaten Trump’s support in farm states.
- Lifting the tariffs opens the way for the final ratification of the straightforwardly named U.S.-Mexico-Canada Agreement (USMCA), the replacement for NAFTA agreed in November of last year which still faces domestic political headwinds in all three countries.
- In another victory for free traders, Trump also put off tariffs on automobiles from Europe and Japan, premised on similarly specious “national security” concerns. The move relieves a key source of tension with close U.S. allies.