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Canada and U.S. reach deal on steel tariffs

Last Updated May 17, 2019 at 7:28 pm PST

Rolls of coiled coated steel are shown at Stelco in Hamilton, Ont., on June 29, 2018. If the midterm elections were supposed to wipe clear the uncertainty of tariffs, trade and other smudges on the window into Canada-U.S. affairs, well, have a look at the bizarro world of politics in the United States of America. A Democratic majority in the House of Representatives was "very close to complete victory" for President Donald Trump. The election is both over and not over, thanks to vote-counting disputes in Florida, Georgia and Arizona. There's a new trade deal, but the White House and Canada are still staring each other down over steel and aluminum. THE CANADIAN PRESS/Peter Power

OTTAWA (NEWS 1130) — Canada and the United States have reached a deal to end the year-long dispuite over steel and aluminum tariffs.

The deal will see all tariffs, counter tariffs and litigation dropped within two days, and avoids any quotas the U.S. has been seeking. There’s also a commitment to work together to prevent cheaper foreign steel from freely flowing thorugh North America.

RELATED: Canada ‘encouraged’ in tariff war with U.S. on metals but no solution in sight

Prime Minister Justin Trudeau made the announcement at the Stelco steel plant in Hamilton, Ontario with Foreign Affairs Minister Chrystia Freeland and Finance Minister Bill Morneau.

He said it was just pure good news.

“It’s a good day for steel and aluminum workers right across the country,” he said. “Families will know that their jobs are a little bit more secure.”

In a statement, Trudeau said the decision reflects the friendship and long-standing partnership between Canada and the United States.

He said there wasn’t a particular breakthrough moment that led to this, just a lot of hard work and negotiations.

The agreement removes a hurdle to ratifying the deal that replaces NAFTA — USMCA — something Trump says he wants to see put into place right away.

“It’s going to be a fantastic deal for our country, and hopefully congress will approve the USMCA quickly,” he says.

Ratification will be the focus for Vice President Mike Pence when he travels to Ottawa to meet the Prime Minister at the end of the month

President Donald Trump slapped the tariffs on Canada and Mexico in 2018 during the heat of the NAFTA negotiations, something that has been a major sore point in Canada-U.S. relations over the past year.

Work will begin in the coming weeks to ratify the deal.

Shares up for steel company

At midday, the news had Stelco shares up $1.79, or 11.7 per cent, at $17.11 on the Toronto Stock Exchange. Word of the agreement began to trickle out amid reports that U.S. negotiators had backed off long-standing demands for a hard limit on imports of Canadian steel and aluminum, part of an effort to keep cheap Chinese product out of the country.

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Late Friday morning, President Donald Trump and Prime Minister Justin Trudeau wrapped up their third phone call in less than a week on the tariff dispute, including Canada’s decision to retaliate with more than $16 billion of its own punitive levies on American products.

“The two leaders discussed the United States’ Section 232 tariffs on steel and aluminum and Canada’s retaliatory tariffs,” the Prime Minister’s Office said in a readout of the call.

They “also discussed relations with China, uranium, and the new NAFTA.”

Tariffs meant to prevent influx of Chinese steel

One year ago, Commerce Secretary Wilbur Ross said the tariffs on Canada, as well as Mexico, were necessary to prevent a flood of cheap Chinese steel into the U.S. through its NAFTA partner countries.

Ross also said the U.S. was imposing tariffs on Canada and Mexico because the trade talks were taking too long, even though they were ostensibly imposed under a section of American trade law that gives the president that authority to do that to protect national security.

The Trudeau government has branded the tariffs as illegal, absurd and insulting, while Canada and Mexico say that it will be tough to ratify the new continental free trade agreement — the United States-Mexico-Canada Agreement — if they remain in place.

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Ottawa has also been working to demonstrate to Washington that it has taken steps to stem the flow of cheaper Chinese metals into Canada.

But Canada has stood firm with the U.S. on one key, related point: it has steadfastly refused to agree to quotas or other limits on its exports in order to get the tariffs lifted.

Canadian sources have described the idea of a quota system as a non-starter and a concession that Canada was not prepared to make.

A U.S. Commerce Department review found that imports of automobiles and some parts could hurt U.S. national security, but Trump decided to wait 180 days before imposing tariffs and ordered new talks to deal with the issue.

The Commerce Department reached the same conclusion about Canadian and Mexican steel and aluminum imports almost one year ago.