Iowa leaders praise President for dropping tariffs against Mexico and Canada

President Donald Trump - AP image

Governor and Ag Secretary call on Congress to ratify the USMCA.

Posted: May 17, 2019 2:47 PM
Updated: May 17, 2019 4:48 PM

WASHINGTON (AP) — Bogged down in a sprawling trade dispute with U.S. rival China, President Donald Trump took steps Friday to ease tensions with America's allies — lifting import taxes on Canadian and Mexican steel and aluminum and delaying auto tariffs that would have hurt Japan and Europe.

By removing the metals tariffs on Canada and Mexico, Trump cleared a key roadblock to a North American trade pact his team negotiated last year. As part of Friday's arrangement, the Canadians and Mexicans agreed to scrap retaliatory tariffs they had imposed on U.S. goods, according to four sources in the U.S. and Canada who spoke on condition of anonymity ahead of an announcement.

Iowa Governor Kim Reynolds issued the following statement on this latest development:

“Today represents a significant step forward for Iowa’s agriculture and manufacturing industries. Mexico and Canada are Iowa’s top two trading partners, and the removal of steel, aluminium, and retaliatory tariffs will increase exports of Iowa products. I want to thank President Trump and his administration for leading on this important issue throughout the entire negotiation process. Now that these tariffs have been lifted, it’s critical for Congress to ratify the USMCA as soon as possible.”

In a joint statement, the U.S. and Canada said they would work to prevent cheap imports of steel and aluminum from entering North America. China has long been accused of flooding world markets with subsidized metal, driving down world prices and hurting U.S. producers.

Earlier Friday, the White House said Trump is delaying for six months any decision to slap tariffs on foreign cars, a move that would have hit Japan and the Europe especially hard.

Iowa Secretary of Agriculture Mike Naig issued the following reaction:

“I’m encouraged by the trade news coming out of Washington today. With the steel tariffs lifted, this is the time for Congress to approve the USMCA. The passage will protect our relationships with two of our biggest ag trading partners, Canada and Mexico. Japan is also a valuable trading partner for Iowa livestock producers, and now they will have the opportunity to sell beef products without restrictions.”

Trump still is hoping to use the threat of auto tariffs to pressure Japan and the European Union into making concessions in ongoing trade talks. "If agreements are not reached within 180 days, the president will determine whether and what further action needs to be taken," White House press secretary Sarah Sanders said in a statement.

In imposing the metals tariffs and threatening the ones on autos, the president was relying on a rarely used weapon in the U.S. trade war arsenal — Section 232 of the Trade Expansion Act of 1962 — which lets the president impose tariffs on imports if the Commerce Department deems them a threat to national security.

But the steel and aluminum tariffs were also designed to coerce Canada and Mexico into agreeing to a rewrite of North American free trade pact. In fact, the Canadians and Mexicans did go along last year with a revamped regional trade deal that was to Trump's liking. But the administration had refused to lift the taxes on their metals to the United States until Friday.

U.S. Senator Joni Ernst also commented on the President's decision:

“This is huge news for Iowa—especially our state’s farmers and manufacturers who have been caught in the crosshairs of this tariff war with our neighbors. Months ago the president indicated that when a new trade deal was reached with Mexico and Canada, the tariffs would no longer be needed. Today’s he’s followed through on that."

“I’ve continuously shared stories of the severe impact these tariffs have had on folks back home and pressed President Trump and his administration about the urgent need to remove the 232 tariffs from two of Iowa’s top trading partners."

“Now more than ever is the time for Speaker Pelosi and our House colleagues to signal their support for USMCA. We need to ratify this agreement swiftly—Iowa’s farmers and manufacturers are counting on it.”

The new trade deal — the U.S.-Mexico-Canada Agreement — needs approval the legislatures in the U.S., Canada and Mexico. Several key U.S. lawmakers were threatening to reject the pact unless the tariffs were removed. And Canada had suggested it wouldn't ratify any deal while the tariffs were still in place.

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