WASHINGTON—U.S. President Donald Trump and Republican leaders in Congress have agreed to kill an import-tax proposal that was strongly opposed by the Canadian government.

“While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform,” Trump’s treasury secretary, Steven Mnuchin, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell jointly announced in a news release on Thursday.

Foreign Affairs Minister Chrystia Freeland hailed the death of the tax.

“Canada is pleased to see the border tax proposal dropped by the U.S. We know our people and economies prosper together,” she said on Twitter.

The Conservatives’ Canada-U.S. relations critic, Randy Hoback, said they were “pleased” with the decision, having told U.S. lawmakers that the tax would have “damaging effects.”

The tax, known as a border-adjustment tax, was pushed by Ryan but faced major resistance in the Senate, where it was thought to be dead on arrival had it been pursued. Trump had sent mixed signals, at one point claiming it would create jobs and at another saying it was “too complicated.”

Prime Minister Justin Trudeau spoke against the tax while addressing energy executives in Houston in March.

“Recognizing, of course, how much the Canadian economy depends on close collaboration and integration with the American economy, anything that creates impediments at the border — extra tariffs or new taxes — is something we’re concerned with,” Trudeau said.

At the World Economic Forum in New York in April, Finance Minister Bill Morneau said Canada believes the tax would create “an initial negative for both economies — and that the negative may be worse for the United States economy.”

In broad terms, the tax would have been applied to imports — perhaps at a rate of 20 per cent — but not to exports. Retailers and other businesses reliant on imported goods had argued that the tax would increase costs for U.S. consumers.

The announcement comes less than a month before the formal opening of negotiations on revisions to the North American Free Trade Agreement. The talks begin in Washington on Aug. 16.

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