Trump exempts Canada from trade tariffs for now

But we'll terminate NAFTA, and that'll be it.

"We are on the losing side of nearly all trade deals", the president tweeted. And it has boosted our domestic economy by $127 billion annually with trade between the U.S., Mexico and Canada almost quadrupling.

In a tweet on Thursday, Trump gave a hint of Canada's exemption from the trade tariffs.

President Trump is playing with fire. First, he's getting NAFTA and trade deficits wrong. China is the world's largest producer of "met coal", but it consumes it all and buys more from overseas, including from the U.S. Australia is also a major exporter of metallurgical coal.

Much as Mexico's trade surplus with the USA has been growing, it is not because the country hones Trump-like trade mercantilism ("exports good, imports bad"), takes advantage of the US or generally runs a big trade surplus with the world. Lastly, the TCJA moved to a more territorial tax system for multinational firms, which largely eliminates US taxes on the foreign profits for exporters.

Other countries that present an alternative way to address the U.S. national-security threat of their exports may be exempt as well.

Second, America's free trade agreements (FTAs) actually improve the country's trade balance.

While there are several factors behind the rising deficit with its non-FTA partners, the simple fact is that the FTAs the USA have clinched - comprising 40 percent of its total trade - have opened markets to the benefit of US exporters.

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Additionally, Trump's attempt to placate the country's biggest steel trading partners, Canada and Mexico, are unlikely to solve the problems impacting the steel and aluminum industries in the U.S.

Teri Schultz, reporting for NPR from Brussels, says Malmström expects more details from U.S. Trade Representative Robert Lighthizer on Saturday.

"Already, more than 500 people are headed back to work in Granite City, as U.S. Steel announced it will restart a blast furnace there".

The administration clarified this week that Canada, the largest single source of imported steel (about 16 percent), would be exempt, as would Mexico (about 9 percent). He promised them tariffs, not a swift trade deal. Most economists have questioned the benefits of tariffs compared to their economic costs, especially in light of the global competitive boost from the recently enacted Tax Cuts and Jobs Act.

NPR's Philip Reeve tells Morning Edition that Brazil is gravely concerned about the USA tariffs, saying that they will hurt trade relations and that the South American country has not ruled out sourcing its coal from elsewhere.

The effect is pretty obvious: The U.S. would export less to other countries and would substitute some domestic production by imports from other parts of the world.

Sullivan called the president's tariffs plan "a very tone deaf move that could negatively impact a lot of workers", many of which voted for Trump in 2016 in critical swing states like MI and Pennsylvania, as well as more solid Republican states such as SC and Alabama that have become major automotive manufacturing centers.

The administration would have done well to allow President Trump's signature legislative achievement to do its work in boosting the competitiveness of all US firms, rather than follow the rash path of imposing tariffs that could dampen the economic benefits of the first major tax reform plan in 31 years. As Dylan continued his lyrics of Love Minus Zero: "Failure's no success at all".

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