Published: Wed, June 06, 2018
Business | By Pearl Harrison

Ottawa in talks with steel, aluminum industries about possible aid

Ottawa in talks with steel, aluminum industries about possible aid

The US decision to impose steel and aluminum tariffs on several of its allies came under fire at a meeting of G7 finance ministers; trade talks between Washington and Beijing failed to yield a breakthrough; and President Donald Trump kept up his fighting talk on Twitter.

Officials in Mexico City unveiled the proposal in recent days, saying the tax would apply to US-produced pork legs and shoulders, which equate to approximately 90% of the nation's $1 billion worth of American-made products.

Mexico is levying import taxes on USA exports of various steels and food products, including pork bellies, blueberries, apples, grapes and cheeses.

Canada retaliated against the steel and aluminum tariffs by proposing tariff on C$16.6 billion worth of USA exports and said it would challenge the us move through the North American Free Trade Agreement and the World Trade Organization.

The tariff dispute comes as Canada, Mexico and the USA try to reach an agreement to update the North American Free Trade Agreement in talks triggered a year ago by Trump's discontent with that deal. Slamming the Prime Minister's "timid" response, he says the US President's protectionist measures against European steel and aluminium are "wrong" and likely to hurt workers both in the US and overseas by sparking a trade war.

The US is Mexico's largest trading partner, receiving about 80 percent of the country's exports.

Mexico is the second biggest market for United States' pork exports and one-third of all pork consumed domestically comes from north of the border.

USA goods exported to China previous year totaled $130 billion while Chinese imports to the US totaled $506 billion.

Canada, Mexico and the European Union had been enjoying a reprieve from the Trump administration's tariffs, but that ended Friday.

Trump's economic adviser, Larry Kudlow, said he thinks Trudeau is "overreacting", adding that he sees trade frictions between the two countries as "more of a family quarrel". But the complaints haven't yet morphed into an effort by those groups to exact a political price from policymakers who enable protectionism. "These tariffs amount to self-imposed barriers to the success of tax reform and we urge the administration to reconsider".

Some conservative USA senators including Ben Sasse (R-Neb.) also raised objections, arguing that tariffs are contradictory to conservative free trade principles.

De la Vega said he expected US pork farmers who rely on the Mexican market to offer discounts to safeguard their relationships with buyers.

The trade fights with Mexico and Canada are part of the Trump administration's "America First" economic agenda, an aggressive policy of seeking to set right what the president views as unfair trade balances that has also put Washington on a collision course with China over trade.

Mexico, for example, has said it will penalize United States imports including pork, apples, grapes and cheeses.

But both USA neighbors are opposed to that possibility and Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau reaffirmed their commitment to reaching a new trilateral deal in a telephone conversation last week.

"Since they know this is temporary, it is only in place until they get rid of the steel and aluminum tariffs, they say I better offer discounts and we can keep working".

Trudeau replied he wants to follow through on the consultations while trying to persuade the drop the tariffs.

Two-way trade is worth USA $600 billion annually but the U.S. has a deficit with Mexico of around United States $65 billion, which Trump has argued is evidence of unfair trade between the two countries.

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