Trump Offers to Revoke Steel Tariff in Exchange for NAFTA Deal

President Trump on Monday suggested he would withdraw the recently announced tariffs on steel and aluminum if Mexico and Canada finalize a new NAFTA agreement. 

The effort to renegotiate NAFTA began last August, with the most contentious issues including access to US procurement deals, a proposal to require more auto manufacturing in the US, dispute resolution mechanisms, seasonal barriers to farming goods, and a clause that would terminate the deal after five years. 

Trump’s announcement about the steel and aluminum tariffs, which he says are needed to protect America’s national and economic security, came just days before the seventh round of NAFTA talks began in Mexico City. 

Canadian Prime Minister Justin Trudeau blasted the tariffs as “unacceptable.” 

“I have spoken a number of times directly with the president on this issue highlighting the integrated nature of the North American steel and aluminum market, highlighting and reminding him of the close security cooperation that we have. I’ve highlighted that this is not something we wanted to see…this proposal is unacceptable,” said Trudeau. 

Due to the “integrated nature of our supply chains,” such high tariffs would cause “significant and serious” disruptions in both the US and Canada, he added.

The effort to renegotiate NAFTA has been largely unsuccessful thus far, with Canada unwilling to meet many of Trump’s demands. Perhaps the threat of a 25% tariff on steel will force Canada into a compromise. 

“We have large trade deficits with Mexico and Canada. NAFTA, which is under negotiation right now, has been a bad deal for USA,” tweeted Trump Monday morning. “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.” Trump also demanded that Canada ease restrictions on American farmers and criticized Mexico for allowing drugs to continue to pour into the US.

—

This style of negotiating is classic Trump: he starts with a tough demand he never expects to achieve (i.e. a 25% tariff on steel) and negotiates into what appears to be a compromise.