When you break norms, those norms are very difficult to re-establish,’ says one former policy adviser to the Canadian Embassy in Washington, D.C.
Despite the safeguards against damaging penalties on Canada’s auto industry under the continent’s newly renamed trilateral trade agreement, the American ability to impose destructive tariffs under the guise of national security protection remains a lingering threat, according to trade experts who warn the damage may have already been done with aluminum and steel.
Since May 31, Canadian aluminum and steel have been subject to tariffs of 10 per cent and 25 per cent, respectively, which were imposed under Section 232 of America’s Trade Expansion Act. The provision in the 1962 legislation allows the U.S. government to impose quotas or tariffs on imported products for national security reasons—a rarely used tool before the administration of U.S. President Donald Trump.
If the U.S. wants to impose more tariffs on Canadian goods, it can say anything is a national security threat, since it’s already done it once, said Eric Miller, a former senior policy adviser to the Canadian Embassy in Washington, D.C., and current head of the Rideau Potomac Strategy Group.
“You have this situation where something that was meant to be a rarely used instrument has now become something that, over the course of the last few months, has basically become a normal part of trade policy that is designed to drive changes and concessions from established U.S. trading partners,” Mr. Miller said.
Canadian negotiators were unable to get the steel and aluminum tariffs lifted as part of the USMCA talks, but speaking to reporters on Oct. 1 in the National Press Theatre, Prime Minister Justin Trudeau (Papineau, Que.) flanked by Foreign Minister Chrystia Freeland (University-Rosedale, Ont.) said, “moving forward on eliminating the tariffs on steel and aluminum remains a priority for us.”
Ms. Freeland added that Canada is looking to take advantage of the momentum that they have generated through the conclusion of USMCA negotiations to “intensify conversations” on steel and aluminum tariffs.
During negotiations, Canada was able to gain some protections from additional Section 232 actions, through two separate side letters in the trade pact. Canada is exempted from auto tariffs under a threshold of 2.6 million passenger vehicles exported to the U.S. from Canada annually, as well as on all light trucks, and $32.4-billion US worth of auto parts. Canada also was granted a 60-day reprieve before a Section 232 action comes into effect where Canada and the U.S. can negotiate a resolution to the dispute. Continue reading No obvious moves to remove tarifs on steel and aluminum says head of Rideau-Potomac Strategy Group – could uranium be next?