Canadian Legislative News

Recent reports have suggested that the Trump Administration could impose auto tariffs upon Mexico by spring 2019. The U.S. website Politico published that the White House has been reviewing the auto tariff document by the U.S. Commerce Department since February. This is believed to offer a justification for national security grounds for the imposition of tariffs on foreign cars in the U.S.

This potential White House action would not directly impact Canada-U.S. auto trade but would strain relationships within the United States-Mexico-Canada Agreement (USMCA).

The investigation was conducted in 2018 under Section 232 of the Trade Expansion Act, the same loophole used to impose steel and aluminum tariffs on Canada and Mexico. Politico also reported that Trade Representative Robert Lighthizer and other senior aides are reportedly concerned that such tariffs would complicate their effort with lawmakers to try and approve the USMCA.

Canadian trade officials and senior officials from the Prime Minister’s Office have confirmed that side letters negotiated as part of USMCA are expected to shield the automotive industries from such levies. This was a significant achievement of the Canadian negotiating team and protects the Canadian retail auto sector and manufacturers from a unilateral move on auto tariffs by the U.S.

In Canada, this “new NAFTA” is making its way through the ratification process. However, the government has indicated the ratification of the deal may hinge on the U.S. lifting tariffs on Canadian steel and aluminum. The Minister of Foreign Affairs, Chrystia Freeland, told U.S. trade representatives that Canada wants the U.S. tariffs and Canada’s retaliatory measures removed before the countries approve of the agreement. In addition to being ratified in Mexico and Canada, the deal must make its way through U.S. Congress as part of a process and it is estimated it will take until the fall to conclude.

NAFA’s Canadian Counsel will continue to monitor and update the membership.