NAFTA is Dead: Trump Seeks Separate Agreements With Mexico and Canada

Canada’s Prime Minister Justin Trudeau

Canada’s Prime Minister Justin Trudeau

President Donald Trump's administration last week imposed USA tariffs of 25 percent on steel and 10 percent on aluminum from Canada - the No. 1 steel exporter to the United States - as well as on Mexico and the European Union. But hope faded when US Commerce Secretary Wilbur Ross announced that the United States would impose tariffs of 25 percent on steel and 10 percent on aluminium from Canada and others from Friday.

Canada, Mexico and the European Union had previously been exempt from Trump's 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports, but the USA snapped them into effect at midnight Thursday.

The EU, Canada and Mexico vowed retaliatory tariffs on USA goods including motorcycles, T-shirts, jeans, grapes, apples, pizzas, mattresses and refrigerators.

Trudeau's trade minister said the government will study the impact of USA tariffs on the steel and aluminum industries before determining the financial support required to protect local jobs.

The federal government wants to consult Canadians before enacting its response, which targets not only USA steel and aluminum, but also a wide variety of goods from orange juice to playing cards to toilet paper.

Trump on Saturday took to Twitter to complain about the higher tariffs charged by some US trading partners under World Trade Organization agreements.

The announcement came as Ottawa and Mexico City announced they were retaliating against steep metal tariffs imposed Friday and Washington faced a barrage of complaints at a finance ministers summit in Canada. Commerce Secretary Wilbur Ross once called Canada's USA envoy, during a Trump visit to Wisconsin, saying he's "never heard him so upset". "At the same time, the Trump Administration's actions underscore its commitment to good-faith negotiations with our allies to enhance our national security while supporting American workers".

The president has repeatedly railed against China on trade during his presidential campaign and earlier this year exchanged multi-billion dollar tariff threats with the country.

Canada and Mexico, embroiled in talks with the United States to modernize the North American Free Trade Agreement (NAFTA), responded swiftly.

Tensions between Canada and the current U.S. administration are escalating in intensity amidst the new trade war launched by President Donald Trump.

Mnuchin denied that the meeting had devolved into a "G-6 plus one", but his counterparts underscored the strong pushback against the Trump administration's protectionist stance.

House Speaker Paul Ryan has said the move "targets America's allies when we should be working with them to address the unfair trading practices of countries like China".

Canada sent 84 percent of its steel exports, worth C$9 billion ($6.97 billion), south a year ago, according to Statistics Canada.

"It is worth remembering that a tariff is nothing more than a tax, and it is not paid by the exporting country- it is paid by the American people", he added.

"It allows us to buy raw materials and whatnot in Canada less expensively, but it also makes our products available for Canadian consumption a lot more expensive. They report a really high surplus on trade with us", he wrote.

Trump and other G7 leaders meet next weekend in Quebec.

Speaking to reporters, Mnuchin said that global economic leadership remains one of President Trump's goals, adding that national security was also of importance to the U.S. But the security aspect is what many of other leaders see as problematic.

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