Steel tariffs may lift when USMCA signed, new Mexican foreign minister says

The U.S. is expected to lift its steel and aluminum tariffs when a new North American trade deal is signed, Mexico's incoming foreign minister said Monday.

Marcelo Ebrard spoke to reporters following talks today with Foreign Affairs Minister Chrystia Freeland in Ottawa. Seven secretaries-designates from incoming Mexican president Andres Manuel Lopez Obrador's government were meeting with their Canadian counterparts.

Freeland confirmed the pair discussed the tariffs. She said she'd "love them to be lifted today" but did not directly answer a question put to both ministers about when they expect the Americans to drop their 25 per cent levy on steel and 10 per cent levy on aluminum products.

U.S. President Donald Trump and other members of his administration have spoken of the tariffs being useful leverage in trade negotiations, as well as a good source of government revenue. But now that a revised U.S.–Mexico–Canada trade agreement has been reached, the Americans have made no commitments about when the tariffs could end, or what the criteria would be for ending them.

"I think that might occur when the agreement is signed," Ebrard said in Spanish. He did not say why he believes that to be the case.

The USMCA is expected to be signed Nov. 30 — the earliest possible date, according to the U.S. Congressional timetable, following a required 60-day period from the date its text was posted (Oct. 1). That's also the last day current Mexican President Enrique Peña ​Nieto is in office.

Peña ​Nieto's ministers presided over the renegotiation of the North American Free Trade Agreement, and although the incoming government has said it will honour the terms negotiated, all parties have said they'd like the deal to be signed before Lopez Obrador's government is sworn in Dec.1.

Suggestions that the Trump administration wanted to hold a symbolic three-country ceremony for the USMCA earlier than late November have been rebuffed by both Canadian and Mexican officials, who have insisted their focus is on getting the tariffs lifted first.

U.S. Trade Representative Robert Lighthizer and Freeland have both said talks to lift the tariffs are on a "separate track" from the USMCA negotiations.

Freeland repeated that Canada sees the tariffs as "unjustified and illegal" according to international trade rules, and is challenging them at both the World Trade Organization and through NAFTA's existing dispute settlement provisions.

While she wasn't as definitive as Ebrard, Freeland did say that it's "quite reasonable" to think that there's momentum building in favour of lifting the tariffs between the North American trading partners.

Both Freeland and Ebrard denied the suggestion that signing on to the final USMCA text under current circumstances made it easier for the U.S. to use national security as justification for future tariffs.

The Mexican delegation is touring Montreal, Toronto and Guelph, Ont., for meetings with provincial governments and various private-sector representatives. In addition to Ebrard, the future secretaries for interior affairs, economy, environment, energy, finance and agriculture are also on this tour.

The group met privately with Prime Minister Justin Trudeau later Monday afternoon.

Lopez Obrador won Mexico's July 1 election with 53 per cent of the popular vote. His party —​ Morena, the National Reconciliation Movement — is a left-leaning social democratic movement with nationalist economic policies. It formed a coalition with a leftist workers' party and the evangelical (socially conservative) 'social encounter party' to win power.

While it has backed away from extreme nationalist positions, Lopez Obrador's platfom focused on populist appeals: empowering the underprivileged, alleviating poverty and violence and eliminating corruption among the political and business elites that Lopez Obrador called Mexico's "mafia of power."

The incoming administration is expected to pay particular attention to the needs of rural Mexicans, making potentially transformative changes in sectors like agriculture.

Tensions remain over steel

Canada's relationship with the outgoing Mexican administration became fraught in the final weeks of NAFTA talks, as Mexico agreed to a bilateral deal with the Americans in August that put Canada under pressure to sign on before the end of September.

The new USMCA trade deal attempts to preserve the integration of North American automotive supply chains, including its integrated steel industry.

A week ago, Mexico's outgoing economy secretary Ildefonso Guajardo telephoned Freeland to express frustration over new surtaxes Canada is about to levy on $200 million worth of two kinds of Mexican steel exports.

Mexico believes that Canada's decision to impose emergency safeguards on energy tubular (pipeline) products and wire rod undermines its argument that its steel exports are fairly priced, despite differences in labour standards and wages across the three countries.

The U.S. has demanded export quotas from Canada and Mexico in return for the removal of the tariffs, something Freeland has appeared to rule out, despite other reports suggesting the industry was being consulted on what kind of restrictions it could accept.

In an interview with CBC News last weekend, Freeland said two countries want to move their bilateral relationship "beyond the NAFTA talks" and get "off on the right foot."

She told Chris Hall, host of CBC Radio's The House: "As far as we know, Canada is the only country that this Mexican team is coming to meet with, and we're very much looking forward to welcoming them."

Freeland characterized Mexico's incoming government as progressive and said it had strong ties with civil society groups in Canada.

On Monday, Ebrard said in Spanish that he hoped the two countries would turn over a new page in the history of their bilateral relationship. In addition to trade issues, the pair discussed cannabis legalization, climate change policies and the protection of human rights.