Welcome news for business as tariffs on Canadian steel and aluminium removed
May 21, 2019
The Federal government announced last Friday that it has reached a deal with the United States (U.S) government to end the year-long tariff feud between our two countries. Last June, the U.S. imposed tariffs on imports of steel (25 per cent) and aluminium (10 per cent) citing national security as the driving force behind them. Canada retaliated, almost immediately, with its own tariffs and launched a legal challenge against the U.S. with the World Trade Organization, arguing that the tariffs were illegal. Since last year Canada has collected $1.27 billion from retaliatory tariff measures that included steel, aluminium and 75 other listed products.
As part of the agreement to remove tariffs, Canada is expected to:
- Withdraw the legal challenge against the U.S.
- Create a monitoring system to watch for potential surges in metal markets
- Set up measures to stop the importation of steel and aluminium that is unfairly subsidized or ‘dumped’
- Make a commitment to prevent transshipment (the shipment of goods to an intermediate destination, then to another destination) of steel and aluminium made outside Canada and U.S. to either country
The deal does not have any mentions of quotas and will exist outside of the Canada-United States-Mexico Agreement (CUSMA) that is still awaiting ratification. We look forward to seeing further details around the tariff agreement in the coming days.
The deal is welcome news for businesses and consumers alike. The tariffs disrupted supply chains and added extra costs for businesses on either side of the border across multiple industries. In addition, the tariffs acted as a major barrier to the new North American free trade agreement. With the tariffs removed, we look forward to all governments swiftly progressing towards the ratification of CUSMA. Ratifying the new trade deal will bring increased certainty around market conditions with Canada’s current largest export partner and improve our trading relationship with the U.S.
Tariffs on both sides were officially removed on Monday, May 20, 2019.