Canada, Mexico could get temporary exemptions from Trump’s tariffs

Will Canada be exempt from U.S. tariffs on steel, aluminum?
There are more mixed messages from the White House about whether Canada will be exempt from the tariffs on steel and aluminum. David Akin reports.

Canada will get at least some temporary relief allowing it to avoid the immediate impact of U.S. President Donald Trump’s controversial steel and aluminum tariffs, the White House suggested Wednesday.

After days of drama and a last-minute diplomatic scramble, the White House is now hinting that the impending tariff announcement might have some form of national-security exception for the U.S.’s neighbours.

“There are potential carve-outs for Canada and Mexico based on national security – and possibly other countries as well, based on that process,” Sarah Sanders said during her daily media briefing.

READ MORE: Trump and your wallet: What could tariffs, trade war do to Canadians’ money?

“That would be a case-by-case and country-by-country basis.”

But the drama isn’t over.

Story continues below advertisement

There are some indications from the White House that the tariff threat might continue to be lorded over Canada and Mexico as a negotiating weapon, in an effort to prod them into a new NAFTA deal.

The formal tariff announcement is expected Thursday afternoon.

Hawkish White House trade adviser Peter Navarro suggests any exemption would come with a catch. He told Fox Business Channel that, at 3:30 p.m. ET, surrounded by steel workers in the Oval Office, Trump will sign proclamations that impose tariffs that kick in within 15 to 30 days on most countries.

He suggested tariffs could still hit Canada and Mexico later: “The proclamation will have a clause that does not impose these tariffs immediately, on Canada and Mexico. It’s gonna give us … the opportunity to negotiate a great (NAFTA) deal for this country. And if we get that, all’s good with Canada and Mexico.”

That was followed by a Washington Post report late Wednesday that said one version of the still-unfinalized plan would see Canada and Mexico granted a 30-day exemption – to be renewed based on progress at the NAFTA bargaining table.

WATCH: White House says ‘potential carve-outs’ for Canada, Mexico on tariffs

White House says ‘potential carve-outs’ for Canada, Mexico on tariffs
White House says ‘potential carve-outs’ for Canada, Mexico on tariffs

Intense debates have been going on within the Trump administration over this.

Story continues below advertisement

Some want a hardline approach where the tariffs apply to every country; some want the opposite, meaning full relief for Canada and other allies. Then there’s the third, middle-of-the-road approach others have suggested, and which Navarro appeared to hint at: offering short-term relief for Canada and Mexico, while continuing to use the tariff threat as NAFTA leverage.

The internal pressure from within Washington to go back to the drawing board was illustrated Wednesday in a letter from 107 congressional Republicans, who expressed deep concern about the president’s plans.

The Canadian government isn’t celebrating yet. It kept a low profile following the White House statement about a carve-out. Speaking earlier in the day, Prime Minister Justin Trudeau said he wants to withhold judgment until the final details are out.

“We know from experience that we need to wait and see what this president is actually going to do,” Trudeau said during a news conference just before the Sanders briefing.

READ MORE: Canada could escape new tariffs by cooperating on NAFTA: U.S. treasury secretary

“There’s many discussions on this going on in the United States right now. We are going to make sure we’re doing everything we need to do to protect Canadian workers – and that means waiting to see what the president actually does.”

Behind the scenes, a full-court, 11th-hour diplomatic press was underway Wednesday.

Story continues below advertisement

It occurred in Ottawa, Washington, New York and even in Texas, where a number of Canadian officials were reaching out to American peers – some of whom had been pleading the Canadian case.

The fact that Canada might be hit with tariffs had actually become a leading talking point for critics bashing the Trump plan. From Capitol Hill, to cable TV, to the Wall Street Journal editorial pages, numerous commentators ridiculed the idea of a supposed national-security tariff applied to Canada.

A poll this week suggested the measures are unpopular.

READ MORE: Canada’s tariff strategy is ‘waiting to see’ what Trump actually does, Trudeau says

Trudeau says Canada will ‘wait and see what the President actually does’ on steel and aluminium tariffs
Trudeau says Canada will ‘wait and see what the President actually does’ on steel and aluminium tariffs

In the final diplomatic push, Foreign Affairs Minister Chrystia Freeland spoke with congressional leader Paul Ryan, and Canadian Ambassador David MacNaughton was to dine Wednesday with U.S. national security adviser H.R. McMaster.

Story continues below advertisement

Defence Minister Harjit Sajjan chatted with Pentagon counterpart James Mattis, UN ambassador Marc-Andre Blanchard spoke with U.S. counterpart Nikki Haley, and Natural Resources Minister Jim Carr raised the issue with Energy Secretary Rick Perry at a conference in Texas.

Trudeau, meanwhile, spoke with the president this week.

A source familiar with the last-minute scramble likened it to a high-stakes, reality-show contest, with a drama-courting U.S. president at the centre of the production: “(It’s a) last-episode-of-‘The-Apprentice’ kind of thing.”

Canada is the No. 1 exporter of steel and aluminum into the U.S., which is looking to impose tariffs under a rarely used national-security provision in a 1962 law, which some critics have called either illegitimate or likely to start copycat measures that threaten the international trading system.

The biggest American business lobby is among those fighting the plan.

“These new tariffs would directly harm American manufacturers, provoke widespread retaliation from our trading partners, and leave virtually untouched the true problem of Chinese steel and aluminum overcapacity,” U.S. Chamber of Commerce president Tom Donohue said Wednesday.

“Alienating our strongest global allies amid high-stakes trade negotiations is not the path to long-term American leadership.”