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Canada and the United States agree to end steel and aluminum tariffs

Source: Canada US
Link: Canada and the United States agree to end steel and aluminum tariffs

In March 2018, President Trump signed an executive order imposing Section 232 tariffs on steel products at the rate of 25% and 10% tariffs on aluminum products for reasons of national security.  At this time, Canada was exempted from the steel and aluminum tariffs.  On June 1, 2018, President Trump signed an executive order to remove the exemption for Canada. On July 1, 2018, Canada retaliated and imposed countermeasures against U.S.-origin steel, aluminum and a variety of other goods (e.e, recreational boats, bourbon, mayonnaise, bottled water, etc).  The Canadian steel countermeasures were at 25% and the other countermeasures were at 10%.

On May 17, 2019, President Trump and Canada entered into an agreement (the Joint Statement by Canada and the United States on Section 232 Duties on Steel and Aluminum) to end the steel and aluminum tariffs against Canada and end Canada’s countermeasures on U.S. steel, aluminum and other goods. The steel and aluminum trade dispute is ending (for now).

The Joint Statement states:

“After extensive discussions on trade in steel and aluminum covered by the action taken pursuant to Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862), the United States and Canada have reached an understanding as follows:

1. The United States and Canada agree to eliminate, no later than two days from the issuance of this statement:

a. All tariffs the United States imposed under Section 232 on imports of aluminum and steel products from Canada; and

b. All tariffs Canada imposed in retaliation for the Section 232 action taken by the United States (identified in Customs Notice 18-08 Surtaxes Imposed on Certain Products Originating in the United States, issued by the Canada Border Services Agency on June 29, 2018 and revised on July 11, 2018).

2. The United States and Canada agree to terminate all pending litigation between them in the World Trade Organization regarding the Section 232 action.

3. The United States and Canada will implement effective measures to:

a. Prevent the importation of aluminum and steel that is unfairly subsidized and/or sold at dumped prices; and

b. Prevent the transshipment of aluminum and steel made outside of Canada or the United States to the other country. Canada and the United States will consult together on these measures.

4. The United States and Canada will establish an agreed-upon process for monitoring aluminum and steel trade between them. In monitoring for surges, either country may treat products made with steel that is melted and poured in North America separately from products that are not.

5. In the event that imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time, with consideration of market share, the importing country may request consultations with the exporting country. After such consultations, the importing party may impose duties of 25 percent for steel and 10 percent for aluminum in respect to the individual product(s) where the surge took place (on the basis of the individual product categories set forth in the attached chart). If the importing party takes such action, the exporting country agrees to retaliate only in the affected sector (i.e., aluminum and aluminum-containing products or steel).”

The affected steel and aluminum products are listed in the Joint Statement.

This is good news for the Canadian steel mills and Canadian steel workers.  It is also good news for suppliers to the Canadian steel sector, such as suppliers of iron ore, pellets and scrap.

What is interesting is point 5, which essentially takes off the table in the future targeted countermeasures against bourbon, bottled water, oranges and other goods.  Canada had selected goods for countermeasures based upon possible influence that affected politicians might have on the Trump Administration to remove the steel and aluminum tariffs against Canada.

It also appears that Canada and the United States will focus energy on antidumping and countervailing duty cases against steel and aluminum originating in or exported from other countries (e.g., China).  The United States and Canada agreed to implement effective measures to prevent the importation of aluminum and steel that is unfairly subsidized and/or sold at dumped prices.  This means more steel dumping and countervailing duty cases are likely.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.

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