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Breaking: U.S. Poised to Remove Steel, Aluminum Tariffs

10:54AM May 17, 2019
breaking news

Breaking News( MGN Image )

(Bloomberg) -- The U.S. is poised to lift steel and aluminum tariffs on Canada and Mexico in favor of stronger enforcement actions, according to people familiar with the matter, in a move that helps clear the way for ratification of the new Nafta.

The date that the tariffs will go into effect is the outstanding issue, one of the people said.

The move will lift the 25% steel and 10% aluminum tariffs the U.S. placed on the two trading neighbors almost a year ago in the name of national security. The decision sparked retaliatory duties from Canada and Mexico on U.S. farming goods and other products, and left the potential that lawmakers in all three nations wouldn’t ratify the deal.

As part of the agreement to lift the levies, the U.S. will be able to impose new tariffs on Canada and Mexico if they don’t do enough to prevent any surge of imports of the metals, according to the people. The nations have also all agreed to ramp up efforts to trace where the metals have come from originally, to stop the diversion of shipments from other nations to dodge the tariffs.

The enforcement system will aim to advantage primary steel and aluminum producers in the three-nation trading bloc to ensure that the metal is melted, poured or smelted regionally.

Steel Tariffs

U.S. steelmakers and aluminum producers rebounded off Friday’s lows on optimism that North American allies that the measures will prevent excess supply from flooding their domestic markets.

A S&P gauge of 13 steelmakers pared losses to 1.9% at 11:23 a.m. in New York. The index was down as much as 3.3% earlier. Alcoa Corp., the largest U.S. aluminum producer, was down 0.8%, after sliding as much as 2.4% earlier.

U.S. Trade Representative Robert Lighthizer has briefed lawmakers on Capitol Hill that an announcement of a deal was close, the person said. U.S. stocks gained.

Canadian Foreign Minster Chrystia Freeland’s office and Mexican Foreign Minister Marcelo Ebrard’s office declined to comment.

The tariffs have stood in the way of getting Trump’s new North American trade deal approved by Congress, and ratified in Canada and Mexico. Republican senators, led by Finance Committee Chairman Chuck Grassley of Iowa, have emphasized the urgency of approving Trump’s new North American trade deal, known as the USMCA, as well as the importance of removing existing tariffs and avoiding new ones.

This is a breaking story. Watch for further updates.