In what historians will undoubtedly debate as a master stroke, PDJT announced on Friday that the tariffs on aluminum and steel from Canada and Mexico had been removed. At the same time Canada and Mexico removed their tariffs on American goods. All of this is expected to be in effect by Monday, May 20th.
Bloomberg…President Donald Trump said the U.S. will lift steel and aluminum tariffs on Canada and Mexico, boosting efforts to encourage lawmakers to ratify a new North American trade deal (USMCA).
“I’m pleased to announce that we’ve just reached an agreement with Canada and Mexico and will be selling our product into those countries without the imposition of tariffs or major tariffs,” Trump said at an event Friday. “Hopefully Congress will approve the USMCA quickly.”
In a joint statement Friday, Canada said it will lift retaliatory duties on U.S. products as part of the deal, which will take effect within two days. Mexican Deputy Foreign Minister Jesus Seade, in a Twitter post, welcomed Trump’s removal of the duties. Both nations suggested it would open the way for their lawmakers to approve the new trade pact.”
The question is why now? The USMCA trade agreement was reached a year ago. However, PDJT did not remove the tariffs at that time. Over time the tariffs had become a source of discontent even within the Republican Party.
PDJT may be many things. However, first and foremost he is a businessman. He knows that promises are not the same as action. So he retained the tariffs as leverage until the right moment. That moment was when doing so would provide significant impetus to getting the treaty approved in all three countries. With the recent ratification of Mexico’s labor laws to protect workers in that country and with other recent events, PDJT decided that now was the right time.
While some left-leaning MSM outlets characterized PDJT’s action as “caving” to Republican Senators’ demands or even to Canadian demands, even they pointed out that the trilateral actions would help improve the opportunities for approval of the treaty in all three countries.
The Office of the U.S. Trade Representative, in its official announcement, called the arrangement “great news” for American farmers while emphasizing that it will “continue to protect America’s steel and aluminum industries.”
Washington, DC –Today, the United States announced an agreement with Canada and Mexico to remove the Section 232 tariffs for steel and aluminum imports from those countries and for the removal of all retaliatory tariffs imposed on American goods by those countries. The agreement provides for aggressive monitoring and a mechanism to prevent surges in imports of steel and aluminum. If surges in imports of specific steel and aluminum products occur, the United States may re-impose Section 232 tariffs on those products. Any retaliation by Canada and Mexico would then be limited to steel and aluminum products. This agreement is great news for American farmers that have been subject to retaliatory tariffs from Canada and Mexico. At the same time, the Agreement will continue to protect America’s steel and aluminum industries.
Section 232 highlights another reason why it is the right moment. China had imposed retaliatory tariffs on American farm products after China had reneged on agreed-upon details in their trade negotiations. Negotiations had broken down. Apparently China felt that waiting for impeachment or the 2020 elections was the best course of action. It appeared that American farmers might have to bear the brunt of economic pain until such time as an agreement could be worked out. Perhaps the Chinese felt that the economic pain suffered by American farmers would undercut PDJT’s support in mid-America.
Now however, with Canadian and Mexican tariffs removed, American farmers can sell their goods in Canada and Mexico more easily. And any future issues in the steel and aluminum area will be limited to that area alone. Farmers will not be hit. This also sends a signal to China that America will not back away from working towards a level playing field in trade.
Senator Grassley noted that PDJT’s move was a positive step toward ratification and said,
“Ratification of USMCA will show that the United States can be trusted to follow through on its commitments. It’s up to China to show that it can do the same.”
PDJT’s actions earned a left-handed compliment from Democrat Senator Schumer.
“I have always said that we should be focusing our efforts on China, not on Mexico, Canada or Europe. It is a good thing these tariffs will be lifted, and we should urge our allies to join us in preventing China’s predatory practices.”
Even the US Chamber Of Commerce who has been quite critical of PDJT’s economic actions came out in support of ratification. Tom Donohue, president of the U.S. CoC noted,
“This move, coupled with the lifting of retaliatory duties, will bring immediate relief to American farmers and manufacturers. This action delivers a welcome burst of momentum for the USMCA in Congress, and we urge the administration and Congress to continue their efforts to chart a path toward its approval as soon as possible.”
There are considerable protections for labor in the agreement as well. These include floors on wages that produce specific items and the fact that goods manufactured in Mexico and Canada must have a high percentage of their parts created within the three countries if they are to flow into America without tariffs. Previously China had used Mexico and Canada as a backdoor around US tariffs.
Keep in mind that PDJT and Secretary Ross created the tariffs out of thin air using a little-used law on the books. This created leverage. Now, in exchange for removing tariffs that previously didn’t exist and that were significantly degrading both Canada’s and Mexico’s economies, Canada and Mexico remove their anti-free trade duties. This opens their markets to more U.S. goods. They also agree to the terms which were part of the original demands and purposes of PDJT. This closes off the backdoor.
So, did PDJT “cave” to pressure? Hardly. He saw this time as being the right time to advance the treaty with his lifting of the tariffs.
The real question is why didn’t previous administrations (both Democratic and Republican) do this? Either they were horribly incompetent, horribly corrupt or both. They certainly didn’t have America’s or Americans’ best interests in mind. More and more “Citizens of the World” are demanding leaders like PDJT, leaders who truly have the common people’s best interests at heart. Witness what happened in the Australian elections this past weekend.
This act of lifting the tariffs is pure Art of the Deal. His tactical timing instincts are just incredible. It now appears that the only obstacles to passage of the treaty in this country are Democratic hatred of the President and/or large labor unions wanting featherbedding rules to be embedded in it.
Will the Democrats stand with the American people? Will they allow PDJT to get a victory for America? Or would they rather American workers suffer than let PDJT get credit? Will they try to block a rare deal that would be good for both business and labor alike?