WASHINGTON—The U.S. and Canada have agreed to remove tariffs on each other’s steel and aluminum and all related retaliatory tariffs, eliminating a major source of friction between the two countries and a key obstacle to the ratification of a new free-trade agreement.

The tariffs will be gone within two days, according to a joint statement issued Friday afternoon.

U.S. President Donald Trump’s administration had insisted for months that the tariffs on Canada would not be lifted unless quotas were imposed in their place. Prime Minister Justin Trudeau objected, and Trump accepted an agreement that does not include quotas.

Instead, the two governments settled on a variety of other measures.

They said they would create a shared system for monitoring “surges” in trade of steel and aluminum products. If imports of a particular product are found to have surged “meaningfully beyond historic volumes of trade over a period of time,” either country can request a consultation with the other, then impose tariffs on that individual product — not the whole steel or aluminum industry at once. The other country can then impose retaliatory tariffs, but only on other products in the same industry.

They also committed to vaguer provisions aimed at keeping low-cost Chinese steel from being sent through Canada to the U.S. The provisions will “prevent the importation of steel and aluminum that is unfairly subsidized and/or sold at dumped prices,” “prevent the transshipment of steel and aluminum made outside of Canada or the United States to the other country,” and treat “steel that is melted and poured in North America separately from products that are not,” the statement said.

Trudeau described the agreement as “just pure good news for Canadians, for families, as they head into that long weekend.”

“A lot of people were talking about whether we would accept quotas, whether we would accept certain restrictions, and we stayed strong,” he said during an appearance with steelworkers in Hamilton.

The U.S. and Mexico announced Friday that they had also reached a deal.

Trump had faced pressure to rescind the tariffs from not only Canada and Mexico but from his own party and voters.

Trudeau’s government had warned Trump that Parliament would not vote to approve a replacement for the North American Free Trade Agreement, one of the president’s top policy priorities, if the tariffs remained in place. Senior Republican legislators told him that Congress also needed the tariffs removed before voting, and farmers and business groups in Trump-friendly states complained that they were being hurt by retaliatory tariffs from Canada and Mexico.

Trudeau did not offer a specific timeline for Canadian ratification, but he said he is “very optimistic we’re going to be able to move forward — move forward well in the coming weeks.”

Aluminum Association of Canada chief executive Jean Simard hailed the tariff deal as “Christmas all over again.”

Simard said his group has long asked for a joint monitoring process. He said the provision allowing for possible future tariffs “makes a lot of sense,” since it limits the possible tariffs to specific products rather than permitting new levies on the entire industry, and he applauded Trudeau’s team for refusing to accept tariffs or quotas.

“It would’ve been so easy to give in to get pressure off their back,” he said.

The dispute began in 2018, when Trump controversially used a “national security” provision of U.S. trade law to impose a 25 per cent tariff on steel and 10 per cent tariff on aluminum from Canada, Mexico and other countries. Trudeau responded with equivalent tariffs on U.S. steel and aluminum, plus 10 per cent tariffs on dozens of unrelated products produced in parts of the country critical to Trump’s political coalition.

Trump, who had made a vocal case that his tariffs were succeeding, did not specifically discuss the deal in his Friday speech to U.S. realtors, referring to a new “agreement with Canada and Mexico” but leaving it unclear whether he was talking more generally about the new NAFTA he again urged Congress to pass. Vice-President Mike Pence tweeted about the tariff deal and announced a May 30 visit to Ottawa.

Congress is a far bigger ratification challenge than Parliament. While the tariffs are a key impediment to getting the new NAFTA approved in the U.S., several other hurdles will remain. The Democrats who control the House of Representatives have demanded changes to provisions on intellectual property protections for certain sophisticated pharmaceuticals known as biologics, and they have demanded new provisions to allow for stronger enforcement of labour standards.

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Trump’s tariffs have tested the bilateral relationship with Canada, especially during the NAFTA negotiations last year.

Trudeau had called the tariffs illegal and insulting, arguing that Canadian industry should never be considered a national security threat to the United States. Trump had taken offence to Trudeau’s pushback, at one point dispatching senior aides to publicly disparage the prime minister.

Trump had initially suggested that he was merely using the tariffs to increase his leverage in NAFTA talks. But he then made clear that he saw the tariffs as effective policy in their own right, calling himself a “tariff man” and crediting the tariffs for a revival of the U.S. steel industry.

Supporters of the tariffs argued that they have resulted in major factory investments and more than 10,000 steel and aluminum jobs being created or saved. Critics noted that the tariffs harm the far larger number of people who work for companies that use the steel and aluminum the tariffs have made more expensive, plus millions of consumers and shareholders.

Tariffs are taxes on imports. They are paid by the importer. For example, under Trump’s 25 per cent tariff on Canadian steel, an American company buying $100 worth of Canadian steel pays the U.S. government $25.

With files from Tonda MacCharles

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