Trump Reviewing Tariffs on Canada Steel and Aluminum, Craft Says

(Bloomberg) -- The U.S., Canada and Mexico remain at odds over metals tariffs, with Donald Trump’s envoy to Canada saying the president is reviewing them.

Trump’s ambassador, Kelly Craft, argued Friday the levies on steel and aluminum imports were designed to prevent overseas metal from entering America via its neighbors.

“That is not something that is against Canada,” Craft said at an event near Niagara Falls with Canada’s ambassador to the U.S., David MacNaughton. “It’s just protecting North America from other countries that will be passing raw materials through, and also to protect our steel industry at home.”

Her remarks come as Mexico signals there is a renewed push underway to resolve the metals tariff issue before a tentative deal to replace North America’s free trade agreement is signed at the end next month.

“We need to solve that issue before the signing takes place,” Mexico’s deputy economy minister for trade, Juan Carlos Baker, said separately in Ottawa. “Certainly we expect the 232 issue to be taken care of before the signing,” he added, referring to the section of U.S. trade law used to apply the tariffs.

‘Agree to Disagree’

Craft and her Canadian counterpart struck a collaborative tone at Friday’s panel discussion, hosted by the Ontario Chamber of Commerce. “The president is reviewing the steel and aluminum tariffs,” Craft said, adding she and MacNaughton “actually had a nice little frank discussion” during a recent late night phone call, “which is nice that we can agree to disagree.”

MacNaughton expressed optimism the tariff issue will be resolved “sooner rather than later,” partly because he believes they were applied to give the U.S. leverage in trade talks. Now that the U.S., Canada and Mexico have reached a tentative agreement, “there is no need for those tariffs to be in place,” he said.

Canada has taken steps to squeeze the inflow of foreign metals. On steel, it cracked down on so-called transshipment in March and imposed safeguard quotas and tariffs that took effect Thursday. It hasn’t yet imposed safeguard measures on aluminum, of which its exports account for 50 percent of total U.S. consumption.

The U.S. justified the tariffs in the first place by claiming the real concern was that trans-shipment -- when a country circumvents trade restrictions in one country by shipping steel through another. A Chinese company two years ago was alleged to be shipping aluminum into the U.S. through Mexico.

MacNaughton signaled that transshipment fears are part of the ongoing talks between the countries. “We have demonstrated we are prepared to make sure we don’t become some kind of a transshipment point and I think that’s part of the exercise -- making sure the U.S. is convinced that isn’t going to happen,” he said Friday.

The U.S. is pressing for a quota in exchange for lifting the tariffs, according to industry representatives. Canada says it would prefer the U.S. simply to drop its tariffs. If they do, Canada has said it will drop its retaliatory tariffs on steel, aluminum and other products, such as bourbon from Craft’s native Kentucky.

--With assistance from Joe Deaux and Greg Quinn.

To contact the reporters on this story: Josh Wingrove in Ottawa at jwingrove4@bloomberg.net;Bryce Baschuk in Ottawa at bbaschuk2@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary, Chris Fournier

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