Administration Should Lift Section 232 Tariffs on Canada, Mexico, Businesses Say

Leaders of auto, aluminum and farm interest groups are all pushing for the Section 232 steel and aluminum tariffs to be lifted on Canada and Mexico, as the administration said would happen once NAFTA was renegotiated. But none of the groups will make their support for the U.S.-Mexico-Canada Agreement contingent on the tariffs being lifted.

"At this point we have to hope the solution is part of the approval process in the Congress," said former Missouri governor Matt Blunt, president of the American Automotive Policy Council, which represents Detroit's Big Three automakers. "That is our hope at the moment." Blunt said that U.S. assembly plants spend $474 more on steel per car than competitors in Europe, and about $275 to $300 of that is "directly attributable" to the 25 percent tariffs on steel. He said the rest is because there are 167 antidumping and countervailing duty actions against steel producers in 33 countries. "At the peak it was $600 more than competitors," he said.

"Our support is not contingent on the removal of the tariffs, but we certainly think the administration runs the risk of undermining the benefits of the agreement" if the tariffs are not lifted on NAFTA trading partners, he said. Blunt and others were speaking at a Global Business Dialogue forum Jan. 24 in Washington.

Chris Pratt, Mid-Continent Nail Corp.'s steel and wire operations general manager, said the Missouri plant has laid off 209 of its 500 workers as a result of the increased cost of the steel they use to make nails. Most of that steel comes from Mexico, where the parent company is based, and they have applied for 24 product exclusions from the Commerce Department. They have not gotten any approvals in the seven months since they applied. Within 14 days of the tariff going up on Mexican steel, Pratt said the company lost 60 percent of its orders. Only 20 percent of nails used in the U.S. are produced domestically, he said, so the winners are foreign nail fabricators more than domestic steel companies.

It's not just metals consumers who are suffering because of the tariffs, according to Dave Salmonsen, senior director of government relations for the American Farm Bureau Federation. Salmonsen said that when he was attending the group's national convention 10 days ago, he was pelted with questions on tariffs and trade. "They all boiled down to: 'When is this or that going to end? When is the Congress going to pass USMCA?'" He said he also is asked frequently why the metals tariffs weren't lifted when USMCA was signed.

Salmonsen added drily, "And my answers were particularly unsatisfying." The Farm Bureau has projected that ag exports to Canada and Mexico will each fall by about $1.8 billion to $1.9 billion as a result of retaliatory tariffs for the Section 232 tariffs on steel and aluminum.

Salmonsen said the Farm Bureau's support for ratifying the new NAFTA is unconditional. "We also encouraged the administration to do something about the tariffs. While they're not directly linked as a condition, they're certainly in the same room together, aren't they?"

Aluminum Association CEO Heidi Brock was the most vocal of the panelists about the unacceptability of quotas. She said about $8 billion worth of aluminum is hit by the tariffs, and about half of that comes from Canada.

"I don't think the administration believes that Canada is unfairly subsidizing the industry. I think it's a border management issue," she said. Canada has put in new measures to combat transshipment of metals (see 1804260036), and she said that if the U.S. thinks those safeguards aren't robust enough, negotiators should talk with Canada about that.

Brock said that Chinese overcapacity has not been reduced as a result of the 10 percent tariffs on aluminum, and she said that her association's successful AD/CVD cases on common alloy sheet metal and aluminum foil are far more effective tools to combat Chinese abuses. "The vast majority of the domestic aluminum industry is not interested in this protectionist trade policy," she said.