Published: Tue, October 02, 2018
Markets | By Noel Gibbs

With NAFTA sorted, focus shifts to aluminum and steel tariffs

With NAFTA sorted, focus shifts to aluminum and steel tariffs

It would then be submitted for approval by the U.S. Congress, now controlled by Trump's fellow Republicans. Lawmakers have said they do not expect Congress to vote on the deal until early next year.

"We've had the prime minster tour many of our facilities throughout the country, aluminum and steel, and (he) basically said, 'Look, we've got your back, these (tariffs) are illegal, '" Neumann said Monday.

President Donald Trump reportedly accepted the new deal while Canadian Prime Minister Justin Trudeau held a late-night meeting with his Cabinet in Ottawa. Every time there's a deal there's a little more access given. This is slightly above the 3.25% market access Canada would have given the United States as part of the Trans-Pacific Partnership, which Trump pulled the U.S. out of past year.

The Dow and S&P 500 began the fourth quarter on a positive note on Monday, after a last-minute deal to salvage NAFTA as a trilateral pact helped ease trade worries, although major indexes finished off their session highs.

Trudeau repeatedly made the point that he had managed to preserve the protected domestic market, which some USA interest groups said should be scrapped.

Talking up the new accord, Trump declared it a "privilege" for foreign powers to do business with the United States.

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The deal is expected to take effect around January 1, 2020.

The agreement first announced late Sunday, just before a midnight deadline, ended more than a year of tense negotiations sparked by Trump's decision to scrap the quarter-century old North American Free Trade Agreement.

USA farmers will gain access to 3.5% of Canada's dairy market worth $16bn a year, while another requirement stipulates that 40% of components for vehicles produced in the USMCA area must be made in areas paying wages of $16 an hour. But it keeps the former North American Free Trade Agreement dispute-resolution process that the US wanted to jettison.

According to people briefed on the negotiations, Canada will ease protections on its dairy market and provide access that is similar to what the United States would have gained through the Trans-Pacific Partnership, a trade treaty that Trump withdrew from previous year.

The new deal was "terrific" for all three countries, he added.

Moe also says that maintaining access for the province's energy and mining industries is essential as 55 per cent of Saskatchewan's exports and 85 per cent of its imports are American based.

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In Canada, the signing of the deal will take place before the House of Commons goes on winter break. It was unclear, however, whether he had authority from Congress to pursue a revamped NAFTA with only Mexico.

For we already knew that US President Donald Trump knows nothing about the actual details of America's trade agreements, and cares even less.

The new trade pact is significantly better than an all-out trade war, but won't be a game changer for Canadian growth, said CIBC chief economist Avery Shenfeld.

Canada also agreed to a quota of 2.6 million vehicles exported to the United States in the event that Trump imposes 25 percent global autos tariffs on national security grounds. That started a 90-day clock that would let outgoing Mexican President Enrique Pena Nieto sign the new pact before he leaves office December 1.

Canada's ambassador to Washington, David MacNaughton, also said Sunday evening that the two countries had made a lot of progress, but there was no deal yet as there were a couple of tough issues left to resolve. "He's a professional. I'm a professional", Trump said, calling it a "fair deal". From 2020, cars must have 75% of their parts manufactured in Canada, Mexico or the United States to qualify for zero import tariffs - a substantial jump from the current 62.5% requirement. "We certainly are pleased to see that there was an agreement over the weekend but, at the same time, we're very disappointed that current USA tariffs on aluminum imports from Canada haven't been lifted".

Peter Navarro, White House trade adviser, said on Sunday Morning Futures, that the goal for the agreement is to restore "North America as a manufacturing powerhouse".

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