Retaliatory tariffs from Canada and Mexico also remain in place as of this writing (Update: Canada and Mexico are removing them, per The Wall Street Journal). The metal tariffs, enacted on national security grounds, will remain in place against Europe and Japan, which are both U.S. allies.
Canadian and Mexican companies will also face a new compliance burden. They will have to monitor and report their steel and aluminum sources to ensure they are not re-exporting too much metal from China.
The tariffs were overkill as a negotiating tactic for the NAFTA/USMCA agreement, which would have little impact on trade. It will slightly raise car prices, slightly lower dairy prices, and have a few anti-China provisions of likely dubious effectiveness—and that’s about it.
Over these small potatoes, GM, and Ford are each reporting billion-dollar losses related to tariffs. Farmers, a core key part of Trump’s support base, are being hit just as hard, with the administration floating tens of billions of dollars of wealth transfers to shift the blow onto other demographics. The steel industry has benefitted some, but only at steel-using industries’ direct expense, and an estimated cost of $900,000 per job saved.
All this was avoidable. If anything, Mexico and Canada may have been willing to go through with USMCA formalities as a gesture of goodwill towards the U.S. president, who views it as an important political victory despite the low stakes. Instead, Trump’s tariff strategy turned an easy process into a combative, protracted negotiation for no good reason, while trade barriers remain higher than in 2017.
Good news today, but keep it in context.