BREAKING NEWS

BREAKING NEWS

U.S. lifts tariffs on Canadian, Mexican metals, boosting trade pact's outlook

U.S. lifts tariffs on Canadian, Mexican metals, boosting trade pact's outlook
FILE PHOTO - Pipes are seen at Bri-Steel Manufacturing, a manufacturer and distributer of large diameter seamless steel pipes, in Edmonton, Alberta, Canada June 21, 2018. Picture taken June 21, 2018. REUTERS/Candace Elliott -
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CANDACE ELLIOTT(Reuters)
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By David Lawder and Steve Scherer

WASHINGTON/OTTAWA (Reuters) - The United States struck deals on Friday to lift tariffs on steel and aluminium imports from Canada and Mexico, the three governments said, removing a major obstacle to legislative approval of a new North American trade pact.

The separate agreements, which will not impose U.S. quotas on Canadian and Mexican metals shipments, will also eliminate Mexican and Canadian retaliatory tariffs on a broad range of U.S. products, including pork, beef and bourbon.

The United States and Canada said their agreement will be implemented by Sunday afternoon, and includes new curbs aimed at preventing dumped steel and aluminium from China and other countries from entering the U.S. market via Canada.

President Donald Trump had imposed the global "Section 232" tariffs of 25% on steel and 10% on aluminium in March 2018 on national security grounds, invoking a 1962 Cold War-era trade law.

Both Canada and Mexico argued for 14 months that their metals industries posed no security threat as their economies are integrated with the United States, and challenged the tariffs before the World Trade Organization.

"This is just pure good news for Canadians," Canadian Prime Minister Justin Trudeau told reporters after announcing the deal to workers at Stelco Holdings Inc's steel mill in Hamilton, Ontario.

Stelco shares soared 11 percent on the news, while top U.S. steelmaker Nucor fell 3.2 percent and U.S. Steel Corp, which had seen massive profit improvement because of the tariffs, fell 1.2 percent.

TRADE DEAL VOTE

The metals tariffs were a major irritant for Canada and Mexico and had caused them to largely refuse to move forward with ratification the new U.S.-Mexico-Canada Agreement, the trilateral trade deal to replace the 25-year-old North American Free Trade Agreement.

U.S. lawmakers with constituents suffering from Canadian and Mexican retaliation, including Senate Finance Committee Chairman Chuck Grassley, also said they would not consider a USMCA vote with the tariffs in place.

After the deal, Grassley tweeted: "Thank u Mr President for really helping the farmers of Iowa w this important step in USMCA. w lifting metal tariffs @realdonaldtrump just proved he can deliver on negotiations. China ought to take note/start dealing in good faith & take Pres Trump seriously."

Trudeau said Canada would now work with the United States on the timing of USMCA ratification and said he was optimistic Canada would be "be able to move forward well in the coming weeks".

U.S. Vice President Mike Pence said he would meet with Trudeau in Ottawa on May 30 to discuss "advancing" ratification.

Trump, speaking to realtors in Washington, called the pact "a fantastic deal for our country, and hopefully Congress will approve the USMCA quickly, and then the great farmers and manufacturers and steel plants will make our economy even more successful than it already is."

A statement from the office of Mexican President Andres Manuel Lopez Obrador said the agreement to lift the tariff was "beneficial for all countries."

TRANSSHIPMENTS, SURGES

Trump's metals tariffs have been largely aimed at keeping excess production from China out of the U.S. market, and the deal includes a new monitoring mechanism aimed at preventing steel and aluminium from China and other countries from being transshipped through Canada and Mexico to the United States.

But the U.S. Trade Representative's office also said the deal allows it to reimpose tariffs in the event of "surges" in imports of specific steel products. If tariffs are reimposed, retaliation would be limited to the steel and aluminium sectors.

(Additional reporting by David Shepardson and Doina Chiacu in Washington and Anthony Esposito and Stefanie Eschenbacher in Mexico City; Writing by David Lawder; Editing by Susan Thomas and Tom Brown)

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