Nearly a year ago on May 31st, 2018, the US announced tariffs of 25% on imports of Canadian steel and 10% on imports of Canadian aluminum. These Tariffs were to take effect on June 1st, 2018.
Tariffs Impact The Economy
Canada’s steel and aluminum industries are key contributors to the Canadian economy. In 2017, the steel industry contributed $4.2 billion to Canada’s gross domestic product (GDP) and the aluminum industry contributed $4.7 billion. The Canadian and US steel and aluminum industries are deeply integrated and contribute to global competitiveness of the North American economy. Canada buys approximately 50% of all US steel exported, more than any other country. 84% of Canada’s aluminum is exported to the US for further processing.
In response to these tariffs, Canada announced that effective July 1st, 2018, surtaxes or similar trade restrictive counter-measures on imports of steel, aluminum and more than 70 other US products including licorice, coffee, dairy products, pork and bourbon would be imposed. The Canadian tariffs were carefully selected to match the dollar value of the tariffs Canadian companies were paying to the US, as well as to target popular products.
Steel And Aluminum Surtax Repealed Effective May 19th, 2019
On May 17th, 2019, the US announced the lifting of steel and aluminum tariffs on Canada and Mexico. A joint statement from the US and Canadian governments said the tariffs for both sides would be removed within 2 days or in effect May 19th, 2019. The US and Canada said they would monitor the imports to prevent steel dumping, which could affect prices.
Effective May 19th, 2019, the United States Surtax Order (Steel and Aluminum): SOR/2018-152 and the United States Surtax Order (Other Goods): SOR/2018-153 imposing surtax on certain products originating in the United States are repealed. Please note that importers will no longer be required to pay surtax pursuant to the above-referenced orders. Anything released from Customs on or after May 19th will no longer be subject to the US Surtaxes.
The removal of steel and aluminum tariffs make a clearer path for ratification of the replacement of NAFTA (USMCA) in the US Congress although the ratification is still uncertain as the US Democrats have voiced concern over labor and environmental provisions in the deal.
Both Canada and Mexico stated they would not ratify the new deal while the tariffs were in place.
Canada announced that as of April 30th, 2019, Canada collected $1.27 billion from the retaliatory measures. Canada also announced a $2 billion aid package to the steel and aluminum industry to help weather the impact of the trade war and also exempted Canadian companies from paying the import duties on steel and aluminum if they could not source the product within Canada or had contracts requiring them to import from the US.
If you have further questions regarding the impact of international trade on your business, please contact one of the expert Trade Advisors at Pacific Customs Brokers. Find out how you can make the most of your trade opportunities.