Linking Section 232 Action to NAFTA May Backfire

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Is it just me or is there a contradiction developing at the heart of President Trump’s linkage of movement on the North American Free Trade Agreement (NAFTA) negotiations to the application of steel and aluminum tariffs on imports from Canada and Mexico?

I have been pondering this since earlier this week when the topic was raised in the MetalMiner office, but it became crystallized after reading an article by Phil Levy in Forbes this week.

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President Trump has made no secret of his dislike of the NAFTA trade agreement. He has repeatedly pointed to large trade deficits with Mexico and Canada, noting the world’s largest free-trade deal has been bad for the U.S., causing the relocation of companies and jobs. Yet at no time has there been a suggestion that close allies Canada and Mexico constitute any kind of security risk to the U.S.

However, Levy makes the very appropriate point that the new steel and aluminum tariffs are being pursued under Section 232 of the Trade Expansion Act of 1962, in which the provision deals with instances where imports threaten the national security of the U.S. It would seem that the Commerce Department has come to the conclusion that steel and aluminum imports do pose a threat to the viability of the U.S.’s steel and aluminum industries.

Fine — whether you personally agree with it or not is not the issue. That is the Commerce Department’s position and, it would seem, President Trump’s too, and therefore justifies some form of action in order to protect U.S. national security.

But this week during the seventh round of the NAFTA renegotiation talks in Mexico City, U.S. Trade Representative Robert Lighthizer presented a tweet from President Trump saying that tariffs on steel and aluminum will only come off if a new and fair NAFTA trade agreement is signed. It would seem as an incentive to strike an early deal.

But where does that leave the rationale of national security, Levy quite rightly asks?

Either sourcing steel and aluminum from Canada and Mexico poses a threat to U.S. national security or it does not. It’s hard to see how the conclusion of a new NAFTA deal would alter the security situation, suggesting the president’s linkage between an exception for Canada and Mexico and the conclusion of a renegotiated NAFTA agreement has little to do with national security and more to do with leverage and protectionism.

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This opens the floodgates for challenges, both domestically and internationally, as the legitimacy of the U.S. position depends heavily on whether the U.S. national security claim is plausible, Levy argues. Whether the pursuit of measures to stem imports of steel and aluminum were originally seen as part and parcel of the NAFTA renegotiations or whether this is an opportunistic melding of otherwise completely separate issues is hard to tell.

Without doubt, however, those opposed to the import duties and inclined to use legal action will see this as an opportunity to undermine the U.S. argument.

Comment (1)

  1. Michael Richard Palmacci says:

    That’s because he is using the 232 to denuclearize North Korea. Wake up.

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