The US has decided to lift tariffs on steel and aluminum imports from Canada in a move that could lead to approval for a new North American trade deal.

In a joint statement, the US and Canada announced that a 25% tariff on steel imports, and of 10% on aluminum, will end in 48 hours.

It is widely expected the US and Mexico will make a similar announcement soon.

In 2018, the US implemented the tariffs on grounds of “national security”.

Under the new agreement, there will be no quotas on how much steel or aluminum the three countries buy from overseas.

However, the US and Canada will monitor imports and if a country is determined to be buying in too much, one of the other nations can request a consultation and potentially re-impose tariffs.

Getting rid of the tariffs is viewed as a key hurdle to approval for the US-Mexico-Canada Agreement (USMCA) trade deal which was signed in 2018. It replaced the North American Free Trade Agreement.

USMCA: US and Canada Reach New Trade Deal Replacing NAFTA

Providing that Washington and Mexico City also announce an agreement to lift levies on steel and aluminum, the US, Mexico and Canada will ask their respective governments to ratify USMCA.

It also targeted US farm goods as well as items like tomato ketchup and household products.

On May 17, Canadian PM Justin Trudeau said: “These tariffs were harming workers and consumers on both sides of the border. As we look at moving forward with the new NAFTA, it didn’t make a lot of sense to continue to have tariffs on steel and aluminum between our countries.”

EU steel and aluminum exports to the US are still subject to the tariffs, but there has been some good news for trade relations between the two.

On May 17, President Donald Trump delayed a decision on whether to impose levies on cars and car part imports.

The White House has put back the decision by six months to allow more time for trade talks with the EU and Japan.

Tariffs of up to 25% on imported cars and car parts were under consideration.

A report by the Commerce Department claimed that imports of foreign-made cars and auto parts into the US were a threat to national security.

The report has not been published, but in his announcement President Trump cited its findings which conclude that US carmakers are missing out on revenues to invest in research and development (R&D).

The announcement said: “The lag in R&D expenditures by American-owned producers is weakening innovation and, accordingly, threatening to impair our national security.”

President Trump said he agreed with the study’s finding that imported cars and trucks were “weakening our internal economy”.

The deal with Canada, as well as the delay in higher tariffs on EU and Japanese cars and auto parts, come at a critical time for the US and China – the world’s two biggest economies.