U.S. Metal Tariffs Could Jeopardize Trade Deal, Canadian Official Warns

WASHINGTON — Canada’s top economic diplomat personally lobbied President Trump’s advisers this week to remove American tariffs on Canadian steel and aluminum imports and warned that the levies could jeopardize that country’s ratification of the rewritten North American Free Trade Agreement.

Bill Morneau, Canada’s finance minister, said in an interview with The New York Times that the United States appeared unwilling to budge on the tariffs despite continued pleas to remove them. Canada has argued that the tariffs of 25 percent on steel and 10 percent on aluminum are harmful to both countries’ economies and make little sense given the United States-Mexico-Canada Agreement reached late last year.

“We continue to advocate for the complete removal of the tariffs,” Mr. Morneau said on Thursday afternoon on the sidelines of the annual spring meetings of the World Bank and the International Monetary Fund.

The United States and Canada have had continuing negotiations about the removal of the tariffs. One option that the United States has proposed is rolling back the tariffs in exchange for Canada agreeing to quotas on its steel and aluminum exports to the United States.

But Mr. Morneau called replacing tariffs with quotas unacceptable.

“We continue to think that the most appropriate way to move forward is just to fully move away from this approach,” said Mr. Morneau, who met this week with Treasury Secretary Steven Mnuchin and Robert Lighthizer, the United States trade representative.

Mr. Trump has pointed to the new trade deal as one of his signature economic accomplishments, but it faces an uncertain path to ratification in the United States. Democrats, who now control the House, are demanding changes to the agreement, and Representative Nancy Pelosi, the California Democrat who leads the House, must agree to bring it up for a vote.

Ms. Pelosi said last week that the House would not vote on the trade deal until Mexico passes new labor laws that are required under the agreement. The revised Mexican labor law, which is devised to give workers greater freedom to organize, passed that nation’s lower house on Thursday and could go to the Senate next week.

Mr. Morneau said that he had been watching the proceedings in Congress carefully and staying in touch with his Mexican counterparts, but said ratification in Canada was also not guaranteed given the tariffs.

“It’s a real issue that we have Canadians asking why we don’t have agreement on that based on getting to agreement on everything else,” Mr. Morneau said. “I made that point to Secretary Mnuchin, that from our perspective steel and aluminum tariffs in two close trading partners don’t make sense.”

He added, “And they certainly don’t make sense in the context of trying to improve our trading relationship by signing a new trade deal.”

Mr. Morneau said that Mr. Mnuchin and Mr. Lighthizer were aware of Canada’s concerns but noted that the steel industry lobby in the United States, which supports the tariffs, is powerful.

At a Senate hearing last month, Mr. Mnuchin suggested that a resolution to the tariffs could coincide with congressional approval of the new trade deal.

Republican lawmakers in the United States have been on Canada’s side when it comes to removing the steel and aluminum tariffs. Senator Charles E. Grassley of Iowa, the chairman of the Senate Finance Committee, has also personally asked Mr. Trump to remove them and publicly called for their repeal this week.

“I’d like to see a resolution with Canada and Mexico on steel and aluminum tariffs,” Mr. Grassley said on the Senate floor on Monday, where he referenced the trade act provision used to impose the tariffs on national security grounds. “I urge President Trump to lift the 232 tariffs so we can forge ahead with United States-Mexico-Canada Agreement and eliminate the uncertainty in the North American market.”

Mr. Trump, however, continues to cast doubt about the future of the agreement. In recent weeks he has threatened to seal the border with Mexico and impose tariffs on Mexican cars — which the new trade deal largely forbids — out of frustration with Mexico’s immigration policies.


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