President Donald Trump signed a proclamation to lower the USMCA Section 232 national security tariffs on some aluminum, steel, and copper imports by ten percent. That action is seen as a response to U.S. agriculture and construction sectors dealing with higher costs due to tariffs.
But then, late on Tuesday, the U.S. administration announced plans to impose new tariffs of at least ten percent on many U.S. trading partners under the USMCA’s section 301. Countries facing these new tariffs include Canada, which alleges that many countries allow goods produced by forced labor to enter their export supply chains. Under U.S. law, the president has the power to impose tariffs if an investigation shows unfair trade practice is harmful to U.S. commerce. Such an investigation was launched back in March of this year.
The announcement of lower tariffs on some steel and aluminum products, including some agricultural equipment and some residential heating and cooling system equipment, would see a 15 percent tariff replacing the 25 percent tariff.
Mark Warner, an international trade lawyer based in Toronto, believes the move to lower some import tariffs on metal products is a sign that the Trump administration is feeling some pressure.
“The Trump administration is feeling the heat around the affordability agenda. It’s not a total relief, but it’s a sign, it’s a sign of progress that Trump does feel some of these trade pressures. I think these changes reflect that some producers are getting the ear of the White House, saying that they’re being affected by these higher prices.”
That ten percent tariff reduction on imported metal products is to take place on June 8.
But the good news of some lower tariffs was cooled by a new threat of a forced labor tariff. In March of this year, the U.S. Trade Representative’s Office made public the launch of an investigation related to Clause 301 of the USMCA. And on Wednesday in Ottawa, Prime Minister Mark Carney said that the latest U.S. tariff threat from the U.S. Trade Office came as no surprise.
“This is not a surprise. It’s something that the U.S. has been planning for a few months. The motivation is something that we share. Canada has a very strong legislative regime against forced labor in supply chains. We don’t want any element of forced labor coming in goods and services, and we want to use our influence to eliminate this practice.”
And while Canada does have rules against goods that were produced with forced labor or child labor, that doesn’t mean it never happens. Wolfgang Aschner studies foreign trade rules and international supply chains at the University of Ottawa.
“The current regime is definitely under-inclusive. We don’t capture all the goods made out of forced labor that we should. The American regime is a little bit more stringent.”
So now, Canada and 15 other U.S. trading partners, including the European Union, the United Kingdom, and several others, are facing a new ten percent tariff. At the same time, dozens of other U.S. trading partners, including Japan, Singapore, India, South Korea, and Vietnam, are facing a new tariff of 12-and-a-half per cent.