UPDATED: Steel Tariffs Are Coming, Canada and Mexico May See Exemptions

Matt Posky
by Matt Posky

There was quite the backlash against President Trump’s plan to impose sweeping steel and aluminum tariffs on Wednesday. However, the White House pressed onward to formalize the measures on Thursday afternoon with assurances from the Commander-in-chief that they will be imposed “in a very loving way.”

Apparently, Canada and Mexico won’t be subjected to the 25-percent tax on steel imports and a 10-percent tariff on inbound aluminum. But the exception may only be temporary and the overall feeling on the tariff proposals are mixed, to say the least. Considering that the automotive industry accounts for a significant portion of the nation’s steel and aluminum imports, Rust Belt states are worried. Michigan, Ohio, Indiana and Pennsylvania receive around 20 percent of the steel and aluminum sent to the United States. Each of the states went red in the 2015 election after Trump said he would protect manufacturing jobs. But Trump claims that’s exactly what he’s doing.

Last week the president took to social media to suggest a trade war might be what America needs to scare its partners into playing ball. He later mentioned that the government must protect its workforce, suggesting that the domestic steel industry needs a lot of help.

However, members from his own party requested Trump reconsider his position on the tariffs — stating they could do more harm than good to manufacturing businesses across the nation. Europe urged similar caution, suggesting the decision could harm business relations between the regions (while threatening its own America-specific import fees in response). China also weighed in, saying it might impose its own tariffs on American imports to the country — potentially harming farmers, since China is the biggest buyer of U.S. soybeans.

Canada, which sends more steel to the United States than any other nation, has numerous firms on the cusp of a full-blown freakout. Understandable, considering coiled steel prices are currently at a seven-year high. The Canadian government has similarly expressed its distaste for the White House’s tariff proposals.

Regardless, they’re going through. Trump will sign an order on Thursday over steel and aluminum tariffs that he said could spare certain countries if they have strong trading and military ties with the United States. That’s good news for Canada. Doubly good, since White House trade adviser Peter Navarro told Fox News the levy likely won’t initially apply to NAFTA members. But the assumption here is that the U.S. will continue to use the threat of steel and aluminum tariffs to convince Canada to negotiate a better trade deal during continued NAFTA talks.

Another country unlikely to be affected by the import fees is Australia, which the president called a “long-term partner.” Germany, South Korea, and Japan are also major steel exporters that could find themselves exempt from taxation, based on their military ties to the United States. However, the U.S. currently has a rather large trade deficit with all three.

Bloomberg reports that Trump will sign the formal proclamations on the tariffs Thursday afternoon in Washington, D.C. Afterward, the president will hold a meeting to discuss the choices made. So far, he has said it’s “going to be very fair, we’re going to be very flexible” while still protecting the American workforce. We’ll be sure to update you.

Update: President Trump went ahead with a pledge to impose import tariffs, as described above, on steel and aluminum, signing two proclamations Thursday afternoon at the White House. As expected, Canada and Mexico are exempt from the tariffs, though there’s no guarantee it will stay that way. Trump alluded to “ongoing negotiations,” meaning NAFTA talks, and implied the two trading partners could lose their special status if renegotiations break down.

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Voyager Voyager on Mar 10, 2018

    There's a structural trade IMbalance between U.S. and the EU of approx. $ 150 billion each year. https://www.census.gov/foreign-trade/balance/c0003.html I'd say that if this is caused by treating imported goods differently, the U.S. has every right to even the balance, without even appealing to national security interests. If the trade imbalance is caused by the simple fact that some goods from the EU are perceived as superior by the American consumer (German cars for instance), then U.S. companies do need to become more competitive.

    • Big Al from Oz Big Al from Oz on Mar 10, 2018

      So, did you know Australia import twice as much from the US than the US imports from us? So, what tariffs should we place on those terrible Americans?

  • Vehic1 Vehic1 on Mar 11, 2018

    highdesertcat: re: "Obama's epic fail" - remember, he caused the 2008 Great Recession (a year before he was President) and (as the NRA warned us) repealed the 2nd Amendment! But fear not - trump won't let the eco-meanies pry the keys to your pollution-emitting, cancer-causing vehicle out of your cold, dead hands. "Enjoy it while you can" - the midterms are coming, a referendum on trumpy.

    • See 2 previous
    • Highdesertcat Highdesertcat on Mar 12, 2018

      @Lou_BC Thank you. I hope that the Big Guy will enjoy continued success for the duration. For many American citizens their world has changed for the better. But I can understand that for some other far-left liberal American citizens, and also especially illegal aliens, their world has turned into a living nightmare.

  • ToolGuy Honda is dreaming. And resting on its 'laurels' (French for 'posterior').
  • SCE to AUX Here's some advice - slow down. That's a great way to arrive home safely, without a ticket, with lower blood pressure, and more economically.
  • Dartdude They need to rebrand the models, The standard model should be Wagoneer and long version should be Grand Wagoneer. There should offer the Ram Rev powertrain in these
  • Irvingklaws Seems more like they're adopting Honda styling queues. Now if they would just adopt their reliability...
  • FreedMike "Obsidian Edition."Oooooh, obsidian is really, really hard stuff.