The removal of an exemption for the EU, Canada and Mexico on the US steel tariffs announced earlier this year has sparked a mini trade war, as Canada responds with its own tariffs on US imports.
When the US announced a 25% tariff on steel imports and a 10% tariff on aluminum imports in March this year Canada, Mexico and the EU were granted an exemption to the new measures. That exemption has been removed abruptly, and the tariffs will apply to Canada, Mexico and the EU from today, 1 June 2018. The only countries that remain exempt are Argentina, Australia, Brazil and south Korea (steel), and Argentina and Australia (aluminum).
Media in North America are reporting that President Trump made this move as a result of frustration over a lack of progress with Canada and Mexico on renegotiating the North America Free Trade agreement (NAFTA). Canada, as the biggest supplier by volume of both steel and aluminum to the US will be the most affected.
Chrystia Freeland, Canada’s Minister of Foreign Affairs, announced it would respond immediately. “Canada intends to impose tariffs on imports of steel, aluminum and other products from the United States—representing the total value of 2017 Canadian exports affected by the U.S. measures. That is $16.6 billion. We are imposing dollar-for-dollar tariffs for every dollar levied against Canadians by the United States,” she said.
Canada has published two lists of goods: one list that will be subject to a 25% tariff; a second list that will be subject to a 10% tariff. The items subject to a 25% tariff are mainly steel and aluminum bars, pipes and products, including railway tracks and pipes used in Canada’s oil and gas industry.
The list of items subject to a 10% tariff includes a wide range of food products, beauty products, plywood, aluminium products such as beer kegs, plus consumer goods like appliances, lawn mowers, candles, ball point pens and even maple syrup. Many are produced in border states that have a high level of trade with Canada.