Survey says: USMCA chaos edition

As it happens, last week we began asking our readers what they thought the outcome of the ongoing USMCA talks might be as far as Section 232 tariffs go. We asked the question because the US lifted Section 232 tariffs from Mexico and Canada in 2019, ahead of the trade pact going into effect in 2020. (Very few see an elimination of tariffs as likely this time around.)

Below are the latest SMU survey results as well as comments from our readers.

By the numbers

The most common response (40%) was that Canada and Mexico would receive different tariff rates.

That tracks with the breakdown in negotiations between the US and Canada. It all started with a TV ad and worsened following controversial public remarks by Canadian Prime Minister Mark Carney at Davos.

At least on the surface, things appear to be less tense between the US and Mexico. Formal talks between Washington and Mexico City have been scheduled. There are no formal talks scheduled between Washington and Ottawa.

Nearly a third of survey respondents think USMCA negotiations will ultimately result in Section 232 tariffs on Canada and Mexico being reduced to 25%. A quarter think the rate will remain on 50%. Very few (only 3%) think Section 232 tariffs will be removed from Canada and Mexico.

But that’s enough from me. Here is what survey respondents had to say, in their own words. As you’ll see, there are some differences of opinion. (Understatement, that.)

Canada and Mexico will receive different rates

“Depends on President Trump’s mood at the time.”

“While the outcome remains uncertain, current signals from policymakers suggest that the tariffs are unlikely to be eliminated entirely. We remain hopeful that the USMCA review will result in more favorable conditions than those currently in place, potentially through a reduction in tariff levels or the implementation of exemptions that improve trade flows between the three countries.”

“The quota/tariffs that Canada put on are a Band-Aid when surgery is required. Until Canada matches the US offshore tariffs, Canada is an insincere steel trading partner that deserves every bit of the 50% and more.”

“Maybe some relief for Mexico. But Canada will not change.”

Tariffs will remain at 50%

“We have seen no willingness for the US to give up these tariffs.”

“Canada and Mexico need the US market, more than the other way around.”

“I’m not sure how these negotiations will go. But obviously Trump’s not too easily going to reduce these tariffs.”

“Trump is … stubborn.”

“Trump doesn’t understand or care about what he is doing to American manufacturing.”

“There is no reason for the US to remove the tariffs. The US still has a trade deficit with Canada and Mexico.”

Tariffs will be reduced to 25%

“It will be a starting point to evaluate total elimination.”

“Tariff reduction as part of negotiations but not eliminated until Trump is out of office.”

“Will be used as a bargaining chip to help other industries/sectors of the economy.”

“Not sure on this as nothing from the federal government now is predictable.”

“Trump lives in a … bubble where tariffs are the solution to every economic issue.”

Tariffs will be eliminated

“I think there will be safeguards in place (maybe modified quotas). But rightfully so, our neighbors/allies won’t be hit with ‘bad actor’ tariffs.”

“It is impacting the economy too much. We need free trade between these countries.”

Make your voice heard!

A big thank you to everyone who participates in our surveys. Maybe you agree with what’s above. Maybe you disagree. In either case, make your voice heard! (We welcome Ds, Rs, and Is. Because that spells DRI!) If you don’t participate in our surveys but would like to, reach out to us at smu@crugroup.com.