Trump’s “new NAFTA” deal with Canada could be relief for developers

Tariffs have pushed up prices for steel imported from Canada

Steel I-beams, Canadian Prime Minister Justin Trudeau and President Donald Trump (Credit: Max Pixel, Wikimedia Commons)
Steel I-beams, Canadian Prime Minister Justin Trudeau and President Donald Trump (Credit: Max Pixel, Wikimedia Commons)

With a tentative bilateral trade deal in their pockets, both American and Mexican officials have their sights set north of the U.S. border with hopes of negotiating new trade deals with Canada.

That could be big news for U.S. property developers.

A deal with Canada that resolves the 25 percent import tax on steel imposed by President Donald Trump’s administration would be a relief for developers working in the U.S., who have seen construction costs rise because of the tariff.

The tentative agreement would revise details in the North American Free Trade Agreement, which Trump vehemently opposes and wants to scrap in favor of a new trilateral deal, or separate bilateral deals with Mexico and Canada. Trump characterized the agreement with Mexico as a completely new trade deal, but the overall NAFTA framework remains in place, according to the New York Times.

Even before the steel tariff went into effect in March, the industry braced for higher costs. Prices for steel, which is usually traded based on estimates of future costs, rose by 10 percent nationwide. Some firms were underwriting projects with a contingency for the higher steel prices.

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The U.S. tariffs, and the tariffs imposed around the world in response, have generally increased prices. Because of strong demand in the U.S., prices for steel produced in the country was up by around 40 percent as early July, according to Global News, a Canadian outlet. That’s driving up prices around the world.

Canada has sat out the talks between the U.S. and Mexico. Trudeau spoke about the possibility of resolving a trade war last week, saying that he was “encouraged by the optimism expressed by the U.S. and Mexico,” but added that “we also recognize that we will only sign a good deal for Canadians.”

Getting the Canadians to agree to come to the table might not be the only challenge. Both U.S. and Mexican officials said Monday they are now focused on Canada.
But their respective heads of state struck much different tones when discussing their northerly neighbor.

Mexican President Enrique Pena Nieto said he spoke to Canadian Prime Minister Justin Trudeau and emphasized to him “the importance of his reinstatement in the process in order to conclude a trilateral negotiation.”

Trump, meanwhile, signaled he was taking a hard stance going into talks with Canada. “We’ll see if Canada can be a part,” of any deal, he said. The president added that the U.S. could further tax car imports from Canada in response to a 300 percent Canadian tariff on American dairy products.

“We can have a separate deal or we can put it into this deal,” Trump said.