U.S. agrees to drop steel, aluminum tariffs on Mexico and Canada

The Trump administration agreed to drop tariffs on steel and aluminum imported from Canada and Mexico. President Trump imposed those tariffs last year. The tariffs have been a source of great tension between the U.S. and its two neighbors, who imposed retaliatory tariffs on U.S. exporters.

To explain the change, National Public Radio’s host, Ari Shapiro, interviews the station’s own Jim Zarroli.

ARI SHAPIRO: Take us through what the president has now agreed to do.

ZARROLI: Well, he’s eliminated these tariffs that he put in place in March 2018. Of course, tariffs are like a tax on imported products. They make them more expensive. But now Canada and Mexico can sell steel and aluminum in the United States without these tariffs in place. And in turn, they’re going to eliminate the tariffs they placed on products they buy from the United States like cheese and whiskey. This is especially good news for farmers, who have seen their sales to those countries plummet, especially dairy farmers. They were big suppliers to Mexico. Now they can sell there again.

SHAPIRO: These tariffs are part of President Trump’s promise to revive American steel. Explain how this was supposed to have worked.

ZARROLI: Well, the global steel industry has gotten very big. There’s been too much capacity, and this causes prices to fall. So the steel industry, in particular, has been in a lot of trouble. The steel industry accused other countries of dumping steel at a low price. President Trump said he wanted to revive the industry.

He wanted manufacturers in the United States to use American steel. And what he did was he cited a trade law which is known as Section 232. And what that says is if there’s an industry that is needed for national security, the president can take steps to protect it by restricting any imports that might compete with it.

Now, this really angered Canada in particular because it is the biggest supplier of steel to the U.S. And Canada said, you know, how can you be citing national security reasons to block our steel when we’re one of your most loyal allies?

SHAPIRO: Yeah, but Canada had been saying that for a while. So is President Trump’s decision to eliminate the tariffs now a recognition that his strategy for the last year hasn’t worked?

ZARROLI: I think he did it because he has bigger fish to fry. The president has this new revised version of NAFTA that he negotiated with Canada and Mexico which, he says, is this huge improvement over NAFTA, although a lot of economists would say it makes basically incremental changes in trade policy. It’s good for auto parts companies, for example.

But the new treaty is called the U.S.-Mexico-Canada Agreement. It has to be approved by Congress. There is a lot of opposition to it. Some Democrats in the House want to rewrite it. But also some Republicans, like Iowa Senator Chuck Grassley, made clear there’s not going to be—there wouldn’t be a vote until these tariffs are gone. So President Trump said, now that these tariffs are gone, Congress should get down to the business of voting on his treaty.

SHAPIRO: Jim, what kind of impact did these tariffs have over the last year?

ZARROLI: Well, the steel industry loved them because once you cut off imports, the price of steel went up for a while. Later on, though, it came down. But there was a huge downside because once you make steel and aluminum more expensive, it hurts all the other industries that use them in their own manufacturing like automakers and, you know, canned goods companies. A lot of them saw their prices rise. So there was a lot of pressure on the administration to reduce these tariffs. And it came from these industries, but it also came from members of Congress.

Janenne Pung