Canada-U.S. Steel and Aluminum Trade Dispute: A Summary

The trade dispute between Canada and the United States over steel and aluminum tariffs has been ongoing for several years. The current 25 percent countertariff imposed by Canada on U.S. steel and aluminum is set to remain in place during negotiations, but both sides are threatening to raise the stakes if a deal is not reached by the new deadline.

Background

In 2018, the United States implemented tariffs on steel and aluminum imports from several countries, including Canada, under the Section 232 provision of the Trade Act of 1962. The Trump administration argued that these imports posed a national security threat to the U.S. economy. In response, Canada imposed its own countertariff on U.S. steel and aluminum exports.

Current Situation

The current countertariff has been in place since July 2019, when Canada raised its tariffs on U.S. steel from 2.7% to 25%. The new tariff is part of a broader trade agreement between the two countries that aims to resolve outstanding trade issues and improve economic cooperation.

Negotiations

The negotiations between Canada and the United States have been ongoing, with both sides making progress in recent months. However, significant differences remain over issues such as market access, subsidies, and non-tariff barriers.

According to sources close to the negotiations, both sides are committed to reaching a new trade agreement that addresses these outstanding issues. The Canadian government has stated its willingness to work towards a mutually beneficial agreement that promotes economic growth and job creation in both countries.

Threats of Raising Tariffs

Despite the progress made so far, both Canada and the United States are threatening to raise their tariffs if a deal is not reached by the new deadline. The Canadian government has warned that it will re-impose its 25% countertariff on U.S. steel and aluminum exports if negotiations break down.

Similarly, the Trump administration has threatened to increase tariffs on Canadian goods, including wheat and barley, if a trade agreement is not finalized.

Impact on Trade

The ongoing trade dispute between Canada and the United States has had significant implications for trade between the two countries. The tariffs imposed by both sides have led to increased costs for businesses and consumers in both countries.

In Canada, the tariffs have resulted in higher prices for steel and aluminum products, which has affected industries such as construction and manufacturing. In the United States, the tariffs have reduced demand for Canadian steel and aluminum exports, leading to job losses in communities that rely heavily on these exports.

Economic Implications

The trade dispute between Canada and the United States has had significant economic implications for both countries. The tariffs imposed by both sides have led to a decline in trade volumes and an increase in costs for businesses and consumers.

In Canada, the decline in trade volumes has resulted in lower government revenue from tariffs, which has had negative impacts on provincial finances. In the United States, the tariffs have reduced demand for Canadian steel and aluminum exports, leading to job losses in communities that rely heavily on these exports.

Conclusion

The trade dispute between Canada and the United States over steel and aluminum tariffs is ongoing, with both sides threatening to raise their tariffs if a deal is not reached by the new deadline. The current countertariff imposed by Canada on U.S. steel and aluminum will remain in place during negotiations, but significant differences remain over issues such as market access, subsidies, and non-tariff barriers.

The impact of the trade dispute has been significant, with higher costs for businesses and consumers in both countries. The economic implications of the tariffs have led to a decline in trade volumes and an increase in costs for governments.

Recommendations

To resolve the ongoing trade dispute between Canada and the United States, we recommend the following:

• Market Access: Both sides should work towards greater market access for each other's steel and aluminum products. This could include reducing non-tariff barriers and increasing bilateral cooperation on issues such as energy and transportation.
• Subsidies: The United States should reduce its subsidies for domestic steel producers, while Canada should address concerns about government support for the Canadian steel industry.
• Non-Tariff Barriers: Both sides should work to eliminate non-tariff barriers that hinder trade between the two countries.

By addressing these outstanding issues, we believe that both Canada and the United States can reach a mutually beneficial trade agreement that promotes economic growth and job creation in both countries.