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Saturday, May 18, 2019, 17:54
Trump lifts tariffs on Mexico, Canada, delays auto tariffs
By Associated Press
Saturday, May 18, 2019, 17:54 By Associated Press

President Donald Trump arrives at John F Kennedy Airport, May 16, 2019, in New York. (EVAN VUCCI / AP)

WASHINGTON — US President Donald Trump on Friday announced to lift import taxes on Canadian and Mexican steel and aluminum and delay auto tariffs that would have hurt Japan and Europe.

Trump still is hoping to use the threat of auto tariffs to pressure Japan and the European Union into making concessions in ongoing trade talks

By removing the metals tariffs on Canada and Mexico, Trump cleared a key roadblock to a North American trade pact his team negotiated last year. As part of Friday's arrangement, the Canadians and Mexicans agreed to scrap retaliatory tariffs they had imposed on US goods.

"I'm pleased to announce that we've just reached an agreement with Canada and Mexico, and we'll be selling our product into those countries without the imposition of tariffs, or major tariffs," Trump said in a speech to the National Association of Realtors.

In a joint statement, the US and Canada said they would work to prevent cheap imports of steel and aluminum from entering North America. 

ALSO READ: Trump says US to impose tariffs on steel, aluminum imports

Earlier Friday, the White House said Trump is delaying for six months any decision to slap tariffs on foreign cars, a move that would have hit Japan and the Europe especially hard.

Trump still is hoping to use the threat of auto tariffs to pressure the European Union and Japan into making concessions in ongoing trade talks. "If agreements are not reached within 180 days, the president will determine whether and what further action needs to be taken," White House press secretary Sarah Sanders said in a statement.

In imposing the metals tariffs and threatening the ones on autos, the president was relying on a rarely used weapon in the US trade war arsenal — Section 232 of the Trade Expansion Act of 1962 — which lets the president impose tariffs on imports if the Commerce Department deems them a threat to national security.

Cars for export and import are stored in front of containers, May 16, 2019 at the harbor in Bremerhaven, Germany, with 2 million vehicles per annum one of the largest automobile hubs in the world. (MARTIN MEISSNER / AP)

But the steel and aluminum tariffs were also designed to coerce Canada and Mexico into agreeing to a rewrite of North American free trade pact. In fact, the Canadians and Mexicans did go along last year with a revamped regional trade deal that was to Trump's liking. But the administration had refused to lift the taxes on their metals coming into the United States until Friday.

The new trade deal — the US-Mexico-Canada Agreement — needs approval from legislatures in the US, Canada and Mexico. Several key US lawmakers were threatening to reject the pact unless the tariffs were removed. And Canada had suggested it wouldn't ratify any deal with tariffs still in place.

Thomas Donohue, president of the US Chamber of Commerce, said the lifting of the tariffs "will bring immediate relief to American farmers and manufacturers. Critically, this action delivers a welcome burst of momentum for the USMCA in Congress."

Canadian Prime Minister Justin Trudeau credited his government for holding out to get the tariffs removed.

"We stayed strong," he said. "That's what workers asked for. These tariffs didn't make sense around national security. They were hurting Canadian consumers, Canadian workers and American consumers and American workers."

Trump had faced a Saturday deadline to decide what to do about the auto tariffs.

In this Jan 19, 2019 photo, Japan's Prime Minister Shinzo Abe, left, and Minister of Economy, Trade, and Industry Toshimitsu Motegi, right, share a light moment during an opening session of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) in Tokyo. (EUGENE HOSHIKO / AP)

Taxing auto tariffs would mark a major escalation in Trump's aggressive trade policies and likely would meet resistance in Congress. The United States last year imported US$192 billion worth of passenger vehicles and US$159 billion in auto parts.

READ MORE: US, Canada reach new trade deal with Mexico

"I have serious questions about the legitimacy of using national security as a basis to impose tariffs on cars and car parts," Iowa Republican Sen Chuck Grassley, chair of the Senate Finance Committee, said in a statement Friday. He's working on legislation to scale back the president's authority to impose national security tariffs under Section 232.

In a statement, the White House said that Commerce Secretary Wilbur Ross has determined that imported vehicles and parts are a threat to national security. Trump deferred action on tariffs for 180 days to give negotiators time to work out deals but threatened them if talks break down.

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