Free Trade

Steel Tariffs Might Kill NAFTA Rewrite

Dozens of business and trade groups say the ongoing steel and aluminum tariffs will "create impediments" to congressional passage of Trump's USMCA.

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PETER POWER/REUTERS/Newscom

President Donald Trump may have to choose between his steel tariffs and his rewrite of the North American Free Trade Agreement (NAFTA).

In a letter sent to the U.S. Trade Representative on Monday, dozens of business groups warned that ongoing tariffs on steel and aluminum imported from Canada and Mexico will complicate the congressional passage of the new U.S.-Mexico-Canada Agreement (USMCA). Congress is expected to consider the USMCA early next year, and the deal must also be approved by the domestic governments of the other two nations.

An overhaul of NAFTA has been a top priority for the Trump administration, but the USMCA does nothing to repeal the ariffs the Trump administration announced in March of this year. Those tariffs apply to all imported steel and aluminum, including imports from both Canada and Mexico.

"The continuation of these tariffs with respect to Mexico and Canada will create impediments to Congressional passage of the USMCA implementing bill given concerns expressed by members of Congress about the use of these tariffs with respect to our two closest allies," the collection of 32 business and trade associations wrote in the letter sent Monday.

The groups—including powerful business lobbies like the U.S. Chamber of Commerce, the National Retail Federation, and several organizations representing American automakers and manufacturers—say Trump's steel and aluminum tariffs "have caused significant harm to American manufacturers, consumers and workers." The tariffs have artificially hiked the price of both foreign and domestic steel and aluminum, providing a small boost (though sometimes not even that) to American producers at the expense of a far larger set of businesses that consume steel and aluminum to make everything from cars to beer kegs to machinery components.

"The tariffs raise the costs of manufacturing in the U.S. and place our manufacturers at a competitive disadvantage with respect to finished products which are made outside of the U.S. and imported without being affected by the tariffs," the trade associations wrote in the letter sent Monday.

When the Commerce Department announced the steel and aluminum tariffs in March, temporary exemptions were granted to Canada, Mexico, and other major U.S. trading partners. At the time, the Trump administration said it wanted to reach bilateral deals for steel and aluminum imports from other countries, but few deals materialized and the exemptions expired in June.

The White House has indicated that it would be willing to repeal the tariffs on Canadian and Mexican steel and aluminum, but that it would seek to replace those tariffs with import quotas similar to the steel quota set earlier this year as part of a bilateral deal with South Korea. In their letter, the business groups say that, too, would be an unacceptable outcome that would "create even more business uncertainty than tariffs" and would have the potential to create shortages.

The gambit here seems to be an attempt to use Trump's own favorite strategy against him. Since embarking on its trade war several months ago, the president and Commerce Secretary Wilbur Ross (among others) have argued that the tariffs are meant only to force other countries to negotiate better deals with the United States. If that's true, then it stands to reason that the administration would have no reason to keep imposing tariffs on Canada and Mexico after the USMCA is ratified.

But having groups like the U.S. Chamber openly threatening to to undermine the congressional passage of the USMCA deal is a sign of just how little trust exists between the administration and the business community, at least when it comes to trade. It's clear that the industry groups signed onto Monday's letter don't believe the Trump administration is ready to lift the tariffs, so they're applying a little leverage of their own.

NEXT: Stossel: Let Them Vape

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  1. But having groups like the U.S. Chamber openly threatening to to undermine the congressional passage of the USMCA deal is a sign of just how little trust exists between the administration and the business community, at least when it comes to trade.

    Since when does the US Chamber represent the entire “business community”? Never. It is not a sign of anything except the Chambers unwillingness to take an honest position. The rewrites are good for US business and open up the Mexican and Canadian markets. To hold that hostage over unrelated tariffs is cycical to say the least. It has nothign to do with trust. It is just cynical politics.

    1. “honest opinion” is rich coming from an economic illiterate.

  2. It’s funny they admit they have enough influences over members of Congress that they can make or break passage of anything they want.

  3. Ugh, I’m officially over Michael Avenatti. First there was the abuse allegation. Now this:

    I have said it before and I will say it again: The Dems need to immediately stop with the calls for the elimination of ICE. This is NOT where the country is generally. We need to change and fix ICE and some of its policies. But we should not eliminate it.

    I cannot believe I ever liked this alt-right white nationalist. He’s endorsing an agency whose mission is, as Shikha Dalmia has observed, morally comparable to enforcing fugitive slave laws.

    #AbolishICE
    #NoBanNoWall
    #OpenBorders
    #LibertariansAgainstAvenatti

    1. “He’s endorsing an agency whose mission is, as Shikha Dalmia has observed, morally comparable to enforcing fugitive slave laws.”

      When have the alt right ever come out against a police force of any description? The fact that this particular agency targets the paperless only serves to increase support.

  4. OK, so now that we have established that Der TrumpfenFuhrer is entitled to put the screws to the American buyers (tax their imports) “for the common good”, AKA, good jobs for (favored) good Americans…

    We now find other actors in the economic zoo who, too, are will to cut off some noses to spite some faces!

    Chickens come home to roost! More news at 11:00!!!!

  5. http://www.scmp.com/business/a…..ck-against …

    Other nations are simply by-passing the USA to bypass Der TrumpfenFuhrer’s hissy fits… Trump thinks we can selfishly and short-sightedly push others around, cynically, for the benefit of a favored few back home in the USA…

    Other nations catch on and treat us likewise, cut us out of the loop? Easterners called it karma, the Bible called it “as you sow, so shall you reap”, and the word on the street is, “what comes around, goes around”.

    But world-class narcissist Trump hasn’t yet gotten the Good Word… Is there any chance that He ever will?

  6. I can’t wait until the USMCA goes in front of Congress. Let’s see what’s in the bill, which to my understanding is even more regulatory than the current NAFTA (wage restrictions, more NA content required in autos, etc). Can’t wait to see the reactions from the conservatarians on this forum.

    1. NAFTA

      USMCA

      Good luck. Let us know.

    2. You had almost 24 hours. No indepth analysis about NAFTA vs USMCA from you?

  7. Pretty easy to swing your dick around when you’ve had 8 exceptional years in a bull market. I wonder if people will feel as inclined to let Trump play fast and loose with trade agreements once this bear market takes hold (and if today is any indication, it’s happening fast)? Gonna be fun to watch (maybe).

  8. Good thing we finally left behind the Great Recession in 2017.

    1. By which metric…other than the one you just pulled from your ass?

    2. Negative GDP in 2008, 2009, 2011, and 2014.

      People in denial just ignore low growth and sporadic negative GDP. It tends to show that the USA was in a Great Recession with some growth and some negative GDP. It happened mostly during Obama’s years, otherwise Lefties would agree that it was Republican’s fault.

      A slow growth would have low positive increases in GDP with no negative.

      A normal economy has ups and downs of GDP without negative.

      A boom economy has fast growth GDP increases.

      A Great Depression has massive negative GDP and trouble getting back to positive GDP.

      1. Damn you are a mendacious little twat. The U.S. hasn’t had negative GDP since 2009, when everybody else in the world, except you, agrees the “great recession” ended. You should just stick to calling people lefties and anarchists. It is the ONLY thing you seem to good at.

        1. But to throw you a bone I think what you were trying to say (very poorly), is that the unemployment numbers did not get to the same levels as pre-recession until 2017. Is that what you wanted to say? Does that shine a big enough light on Trump’s accomplishments as him ending the Great Recession for you? Probably not, but it might be the best thing he and the republican house and senate accomplished.

        2. Look it up dipshit.

          We all kmow youre a troll anywho.

          1. No more than you shitforbrains.

  9. Wait, what? You mean the USMCA isn’t already a done deal? Gosh, from all the messaging and Trumpeteer support, I thought it must be…

    I don’t see anything going on here but the business community trying to leverage Trump’s insistent need for approval against the steel and aluminum tariffs. But it’s a good reminder of how bad Trump actually is at accomplishing anything on the trade front.

  10. Trump gets the Senate approval on treaties, unlike Obama.

  11. Just checking in to see whether the usual Trumpengobblers are here to lick the Orange Clown’s taint.
    John. Check.
    LoveCock1789. Check.
    Last of the Shitferbrains. Not yet arrived.
    I’ll check in later.

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