Will the new NAFTA deal benefit the real estate industry?
The U.S. and Canada finally hammered out a replacement deal, but questions remain over steel tariffs
Tariffs on imported steel have hit the construction industry nationwide but the newly-minted trade deal between the U.S. and Canada may not provide the needed relief, at least not immediately.
With the final piece hammered out Sunday night, the United States-Mexico-Canada Agreement replaces the North American Free Trade Agreement, which took effect in 1994. President Trump has long denounced NAFTA, so despite the fact the same countries are involved, the name, too, has changed.
The new agreement does not resolve the 25 percent tariff on Canadian steel imports that Trump imposed earlier this year. Steel prices climbed nationwide before those tariffs even took effect and had jumped by 40 percent as of early July.
Canada wanted the U.S. to drop the tariff — along with a 10 percent import tax on another construction-relate material, aluminum — as part of the new deal. But that was never made it into the pact. A White House official said the negotiations over the steel and aluminum tariffs are being handled on a “completely separate track,” according to the Washington Post.
More expensive steel will likely tighten the profit margins on large commercial and residential development projects, especially on the projects that aren’t already in the pipeline. The Trump administration enacted tariffs on all steel imports in an attempt to boost the domestic steel industry, which has supported his actions. The president had made that a major campaign promise during the 2016 campaign.
The U.S. and Mexico hammered out their portions of the trade agreement in late August before the U.S. turned to Canada. Trump threatened to go ahead with a bilateral deal with Mexico, but Mexican officials strongly advocated for Canada’s inclusion.
The deal largely keeps the framework of NAFTA intact, with some changes. It gives U.S. farmers easier access to the Canadian dairy market. It also requires 40 to 45 percent of vehicles by made by workers who receive wages of at least $16 an hour, according to the Associated Press.
Canada was successful in keeping a special dispute-resolution process for trade issues. That keeps disputes out of U.S. courts, where Canadian officials felt Canadian firms would be at a disadvantage.