uploads/2018/10/part-2-1.png

Trump Has His Way on NAFTA—Metal Tariffs Still a Sticking Point

By

Updated

NAFTA

The Trump administration has managed to negotiate a new NAFTA deal whereby the United States will gain access to Canada’s hitherto protected dairy industry.

Furthermore, we could see more automotive production in the United States under the new agreement.

Article continues below advertisement

Trade deal

This is the second major trade deal that the Trump administration has managed to renegotiate. Previously, the United States renegotiated its trade deal with South Korea. Under the new terms, South Korea relaxed the norms for automotive imports from the United States. It also agreed to a quota to get long-term exemptions from the Section 232 steel tariffs in the United States (SPY).

While critics would argue that the new norms for automotive imports wouldn’t benefit the US automotive industry much, a steel export quota would certainly benefit US steel producers. South Korea is a leading steel exporter to the United States. US steel companies such as U.S. Steel Corporation (X), AK Steel (AKS), and Nucor (NUE) see unfairly traded steel products as their biggest woe.

Section 232

While Canada, Mexico, and the United States have agreed on a new deal, the issue of the Section 232 tariffs as they relate to NAFTA countries is still unresolved. The Trump administration has been pushing for import quotas to grant long-term Section 232 exemptions. However, the quotas have been a sticking point between the United States and its trading partners. Canada (EWC) is the largest steel and aluminum exporter to the United States.

While the Trump administration has moved forward on trade with Canada and Mexico, its trade ties with China remain a sore spot. We’ll discuss this matter in the next and final article.

Advertisement

More From Market Realist