美加达成贸易暂定协议，加拿大接受钢铝汽车关税

David Westin: This is a story about couples therapy. The U.S. and Canada have been neighbors, allies, and generally friends since Canada first became a country independent of the British Empire, but President Trump has put the relationship in play, particularly when it comes to trade relations. Chrystia Freeland served as Canada's Deputy Prime Minister, Foreign Minister, and Finance Minister. She is now a special contributor to "Wall Street Week."

Having gone to the brink during this week in U.S.-Canada trade relations, we're told that there is a tentative agreement. What at this point do we know about that agreement? -What we know so far is it seems as if the U.S. and Canada have reached an agreement that will prevent the tariffs that the U.S. announced, the brand new ones, the Smoot-Hawley ones, from coming into force against Canada. Those tariffs were meant to be applied on the 19th of August, and on the basis of this almost concluded deal, they haven't come into force.

Westin: What does it do to the tariffs that have been existing? For example, you and I have talked before about aluminum and steel. What happens to those separate tariffs? -So we don't know the full outlines of this agreement, but what people are saying, both publicly and people close to the negotiations, is that what Canada is agreeing to, or is on the brink of agreeing to, is that U.S. booze will go back on the shelves of Canadian liquor stores.

Some Canadian provinces had also put in express either buy Canadian or don't buy American provisions into procurement, that those will be lifted as well. When the 232 tariffs against Canada, the ones on steel, aluminum cars, when those first went into effect, Canada imposed retaliation. Most of that has already been dropped. And on the other side, the August 19th Smoot-Hawley tariffs seem not to go into, likely not to go into effect.

And then on the 232 tariffs, which are steel, aluminum cars and car parts, it seems as if those will remain in place, but at lower levels. And that's really a very critical element of this agreement, because up until now, Canada's position, and this has been Canada's historic position, is, "We have a free trade deal with the United States. Permanent tariffs outside that deal are unjustified and illegal, and we will not accept them."

In this deal, Canada apparently will have lower tariffs on steel, aluminum cars and car parts, but tariffs will be in place and Canada will accept the legitimacy of those tariffs. That's a real Rubicon that it looks like will be crossed. Westin: That feels like a pretty major give from Canada, understanding the tariffs will be lower, but conceding there will be tariffs despite a free trade agreement. I mean, you've negotiated on Canada's behalf in prior trade agreements.

Is that something that can ever be pulled back for Canada, or is that more or less a permanent give? -David, I think that is the smartest and most important question about this entire agreement. The future obviously is unknowable, but the idea that tariffs on these sectors would be accepted by Canada, that is a really big deal. Something that I think is really important to point out here is, you know, I think that is a bad outcome for Canada to have permanent tariffs on our steel, aluminum, cars and car parts, really harmful for those sectors.

But I think it's a bad outcome for the United States as well. It's really important for people to recognize that you can lose by winning if you've defined winning in a way which is self-mutilating. I would say Brexit, the British decision to leave the EU is a great historic example of losing by winning. And in this case, I think it's really important for Americans to understand that putting permanent tariffs on Canadian steel and on Canadian aluminum hurts U.S. manufacturing.

These are inputs into the U.S. manufacturing sector, and you are choosing to make your own manufacturers weaker. The tariffs that were imposed in 2018, there have been a lot of academic studies on the impact, and the net impact was harming U.S. manufacturing. Aluminum tariffs, particularly self-harming, because aluminum is basically electricity in solid form, so the U.S. is basically imposing a tax on electricity. David, you are from Michigan originally, and so you know that Canada and the United States build cars together.

We've done it for a century, for more than a century. And imposing permanent tariffs on cars and car parts is really going to hurt Detroit. So, you know, I think Canadians are real patriots, and Canadians want to support our Prime Minister in this really challenging time. But I think you're going to hear Canadian unions, who represent workers in the car sector, in steel and aluminum, quite concerned. Westin: You mentioned the auto industry, which is central, particularly in U.S.-Canadian trade relations.

And as you know so well, there are auto parts that go back and forth between Windsor and Detroit all the time, several times in the making of a single vehicle. As far as we know with this tentative agreement, is the effect to just increase the price because there are some tariffs, or could it actually impede some of the flow back and forth? -Another great question, David, and you're right. You know, we really do build cars together, and the parts in a finished car can go across the border 7 or 8 times before that car is completed.

Um, the tariffs on cars and car parts are currently in place, and it looks as if this agreement will lower them. So it will be a better situation compared to what we have before the agreement. It will be worse, though, than the USMCA, where there were no tariffs. And I think the concern for anyone in the car sector will be, "Are we moving to a situation of permanent tariffs on cars and car parts?" Something to watch in the details of the agreement is whether car parts and car... car parts that are made in NAFTA are excluded from the tariffs in the NAFTA zone, or whether only car parts made in the U.S. are excluded from the tariffs.

That's a really important distinction. When we were negotiating the USMCA, there was a moment when Bob Lighthizer wanted to include a provision that would require that a certain percentage of a car be manufactured in the U.S. Canada, and I personally, were really, really opposed to that, because then you don't have a free trade deal. You have managed trade. And that's an entirely different principle. Ultimately, it's an entirely different way of running your economy.

But what Bob was worried about was protecting workers' wages, which was something I did support. So what we agreed, and what is in the current USMCA, is something called the Labor Value Content Provision, which requires that a certain percentage of a car be made by workers earning above $16 an hour. I thought that was a great compromise. Protects good-paying jobs, but doesn't introduce that element of protectionism. It will be really important to look in the details of a final agreement between the U.S. and Canada to see if it's specifically U.S.-made parts that are excluded from the tariffs, or whether it is NAFTA-compliant parts.

Westin: You mentioned the USMCA, which you know well, having negotiated it. As far as we can tell with this, as I say, tentative agreement, how does it fit with USMCA? Is it an amendment to it? Does it supersede it? Is it subservient to it? How does it fit? -Seems like it's completely separate. Seems like this is, like so many of the deals that the Trump administration has been doing around the world, this is a one-off.

It is about, you know, the U.S. creating a wound, creating a problem for its partner, and then entering into a negotiation with its partner to have the problem limited. So, it's not connected with the USMCA and with the negotiations that have now been... that have been triggered around the USMCA. And that is a challenge, because there's going to be a big question about whether some of the key issues that ha