Feds dead set against ‘ridiculous’ quotas to replace steel, aluminum tariffs

WASHINGTON – Canada is not about to agree to quotas or other
limits on its exports in order to get the United States to lift
punishing tariffs on steel and aluminum, says a source close to the
ongoing talks to resolve the lingering tit-for-tat trade standoff.

Where the two sides ultimately end up remains to be seen, but the
Canadian source – speaking on condition of anonymity in order to
discuss sensitive negotiations – described the idea of a quota
system as a non-starter and a concession that Canada is not prepared
to make.

“They’re trying to get us to agree to a quota system, which
we’re not going to do, because it’s ridiculous,” said the source.

“They know what they need to do to get a deal. The ball is
entirely in their court.”

Other sources briefed on the talks, however, say quotas are
indeed on the table as the two sides work towards getting the
tariffs lifted before voters in the U.S. head to the polls for
pivotal midterm elections Nov. 6 that could, depending on the
outcome, have ramifications for the U.S.-Mexico-Canada Agreement.

Donald Trump imposed the so-called Section 232 tariffs – 25 per
cent on steel and 10 per cent on aluminum – back in June on national
security grounds.

But the levies, which the U.S. president has acknowledged
publicly helped to expedite the new North American trade deal known
as USMCA, did not go away when the agreement was reached recently at
the 11th hour.

Trump’s now-infamous potshots at Canada, a fixture of his rally
speeches and news conferences while the trade talks were ongoing,
have largely been replaced by domestic political rhetoric as he
ventures into the U.S. heartland, desperate to preserve Republican
control of Congress.

But the anti-Canada commentary has not disappeared entirely.

In remarks to a dinner audience on Capitol Hill this week, Trump
economic adviser Larry Kudlow related a story in which an
unidentified White House official described Prime Minister Justin
Trudeau as “that punk little kid running Canada.”

And a CBC report quoted Zekelman Industries chairman and CEO
Barry Zekelman – Canadian-born, but head of a U.S.-based steel pipe
and tube conglomerate and unabashed champion of American steel
interests – telling a Commons committee that Foreign Affairs
Minister Chrystia Freeland is “way out of her league.”

Carlo Dade, head of the Calgary-based Canada West Foundation,
said it’s clear that there’s a degree of persistent cross-border
animosity, particularly on the part of the office of the U.S. Trade
Representative.

“The USTR really does not like Canada,” Dade said. “They’ve
got a hate on for us, and they’ve had a hate on for us for a long
time.”

Not so, said the source, who’s convinced that it’s all part of
the Trump-fuelled U.S. negotiating playbook.

“It’s all pretty transparent – they’re doing exactly the same
thing” they did during the NAFTA talks, the source said.

“They’ve got their spokespeople out there calling us names, and
their steel people out there attacking Chrystia…. I think a lot of
this is just show business.”

There is, however, a burning economic imperative: the mutually
assured destruction of U.S. tariffs and Canadian dollar-for-dollar
countermeasures on nearly $13-billion worth of trade, a stalemate
that is making itself felt on both sides of the border.

With the midterms looming, Republican Senate majority leader
Mitch McConnell has been urging the White House to resolve matters
sooner rather than later, given the impact that retaliatory tariffs
from Canada, Mexico, China and the European Union are having in the
U.S. – including his home state of Kentucky.

“There is a strong call in the heartland for the president to
lift those tariffs and end the retaliation by Mexico and Canada,
particularly the countermeasures against U.S. farm country,” Dan
Uczjo, an Ohio-based international trade lawyer and partner with
Dickinson-Wright, said in an email.

“It is our understanding that the president is hearing about the
pain inflicted by these tariffs as he hits the campaign circuit in
Iowa, Ohio and other U.S. battleground regions.”