President Donald Trump today signed the proclamation to impose tariffs on steel and aluminum imports with temporary exemptions for Canada and Mexico, as the three countries renegotiate the North American Free Trade Agreement (NAFTA).
The tariffs, of 25% on imported steel and 10% on aluminum, will go into effect on March 23, although the proclamation also includes provisions for other U.S. allies to apply for exemptions.
“We have to protect and build our steel and aluminum industries, while at the same time showing great flexibility and co-operation towards those that are our real friends,” said the President during the ceremony at the White House, flanked by steel workers.
Although the conditions for Mexico and Canada to remain exempt from tariffs were not specified, it is clear that the measure seeks to pressure both countries to yield to U.S. petitions in the renegotiation of NAFTA.
One of the main demands of Washington is to tighten the so-called rules of origin. Such rules cover the percentage of an automobile's inputs, such as parts and labor, that come from the U.S., Mexico or Canada to have a car be deemed to be "made in America" and qualify for duty-free shipping. Currently, 62.5% of a car has to come from a NAFTA country to meet the standard, but the Trump administration wants to increase that to 85% and to also require that at least half of the parts be produced in the U.S.
The tariffs proclamation ceremony took place just a few hours after Mexico, Canada and nine other Pacific Rim countries signed in Santiago de Chile the Trans-Pacific Partnership, a landmark trade agreement of which Mr. Trump pulled the U.S. out in the third day of his term.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will reduce tariffs in countries that together amount to more than 13 percent of the global economy - a total of US$ 10 trillion in gross domestic product. With the United States, the figure it would have tripled.