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Canada and Mexico Also Agree to Remove Their Retaliatory Duties

Monday, May 20, 2019

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The United States and Canadaannounced that an agreement has been reached to remove the 25 percent "Section 232" duties on Canadian origin steel and 10 percent "Section 232" duties on Canadian origin aluminum.  As part of the agreement, Canada also agreed to eliminate the retaliatory duties it had been charging on U.S. origin steel and aluminum, as well as on other non-steel/aluminum products.

Canada and the United States also agreed to drop litigation at the World Trade Organization related to the steel and aluminum tariffs and to take steps to prevent aluminum and steel from being dumped and/or transshipped into their respective markets, as well as to establish a monitoring process that would allow for reimposition of the duties in the event of a surge in imports.

With regard to U.S. "Section 232" duties on Mexican origin aluminum and steel and Mexico's retaliatory duties, an agreement similar to the one reached with Canada was also announced.

The above agreements are significant in that they remove a hurdle to approval of the new United States-Mexico-Canada Agreement (USMCA). The existence of the U.S. "Section 232" duties had been preventing approval of the trade agreement.  To be sure, other political obstacles remain in each country, but removal of the "Section 232" duties allows the political process for approval of the USMCA to advance.

Source: Pisani & Roll LLP

Category: International Trade, Economic News

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