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Adrian Morrow, The Globe and Mail
February 21, 2019
Ottawa’s ambassador to the United States says he is confident the Trump administration will lift tariffs on Canadian steel and aluminum in “the next few weeks.”
Ambassador David MacNaughton told a business forum in Washington on Thursday that he has been in talks with U.S. Trade Representative Robert Lighthizer and Mr. Lighthizer’s deputy, C.J. Mahoney, about the tariffs.
“I think we’re going to resolve this, and I think we’re going to resolve it in a positive way in the next short while,” he said at a Canadian-American Business Council event. “I don’t want to go into great detail, but I think we’re going to resolve this matter soon.”
Asked afterward if he had a timeline in mind, Mr. MacNaughton told reporters: “I’m confident that we’re going to get there in the next few weeks.”
The ambassador hinted that Canada could trade swift parliamentary ratification of the renegotiated North American free-trade agreement – known as the U.S.-Canada-Mexico Agreement (USMCA) – for a lifting of tariffs. Parliament is expected to break in June before the fall election, meaning that if the pact is not pushed through in the spring, it could be delayed until late this year.
“Having these tariffs hanging over [ratification] is going to make everything more difficult, and I think the Americans, the President very much wants to see the new agreement passed. Passed in Canada, passed in Mexico and passed here in the United States,” Mr. MacNaughton said.
But one source in U.S. industry and another in the Mexican government said they had not heard anything about the Trump administration taking the tariffs off. The sources were granted anonymity by The Globe and Mail because they were not authorized to speak publicly on the matter.
The United States has demanded that, in exchange for lifting tariffs, Canada agree to a quota that would cut the amount of steel and aluminum the country could export south of the border, the U.S. source said. Canadian sources had also previously told The Globe that the United States had made the demand. Canada has indicated that it would only agree to a quota that is far higher than current exports.
American negotiators have come to accept that they likely will not get Canada to take a cut in exports, the U.S. industry source said, but there was still no sense that the two sides were close to a deal.
Daniel Ujczo, an Ohio-based trade lawyer who represents steel and auto companies that do business between the two countries, said it was likely Mr. Trump would keep the tariffs on as a way to put pressure on Congress to ratify the USMCA. Most Republicans oppose the tariffs, so promising to lift them in exchange for passage of the deal is a potent piece of leverage.
“If you lift steel and aluminum tariffs, it slows down any momentum for passage of USMCA,” said Mr. Ujczo of Dickinson Wright.
Flavio Volpe, head of Canada’s auto-parts industry group, said it was unlikely the tariffs would come off before Congress signs off on the deal. He said he had not heard anything that would support Mr. MacNaughton’s confidence.
“David has better contacts in Washington than I do, but he doesn’t have access to better logic,” he said.
Mr. Trump imposed tariffs on Canada and Mexico of 25 per cent on steel and 10 per cent on aluminum in June of last year. Canada retaliated with levies on a slew of U.S. products, from steel to frozen pizzas to ketchup.
Now, Canada is lobbying members of Congress, U.S. industry and state governors to press the White House to lift the levies.
Ontario Premier Doug Ford made a jaunt to Washington to pitch in on the effort. He is meeting with Mr. Lighthizer, he told the Canadian-American Business Council event, and plans to press the case that the United States is hurting itself with the tariffs. The costs of tariffs are paid by American consumers.
“It’s hurting both countries equally – matter of fact, to be very frank, it’s hurting the U.S. more than its even hurting Canada,” he said.
Mr. Ford’s government earlier this month called on Ottawa to lift its retaliatory tariffs against the United States as a goodwill gesture to encourage Mr. Trump to drop his tariffs. The Trudeau government flatly rejected the idea, arguing it would rob Canada of its leverage in the negotiations.
On Thursday, Mr. Ford said he was now singing from the same songbook as the federal government.
“No, they’re doing a good job,” he said when asked whether Ottawa had mishandled the tariff talks. Asked if he still believed Canada should end its retaliation, he said: “I’ll leave that up to them to decide.”
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