Canada exemption from U.S. steel tariffs set to expire unless deal reached by May 1

All eyes are on Washington Monday as the deadline looms on a temporary exemption granted to Canada on new steel and aluminum tariffs.

Policymakers and industry stakeholders are keeping a keen eye south of the border watching for any indication that U.S. President Donald Trump will make the exemption offered to Canada and Mexico on March 8 a permanent thing — or at least, extend the temporary exemption.

READ MORE: Canada targets dumped steel from countries like China with new measures

Trump slapped tariffs of 25 per cent on imported steel and 10 per cent on imported aluminum in an attempt to shore up domestic industries in the U.S. by making it more expensive for American companies to buy steel from foreign countries.

The announcement of the tariffs quickly roiled markets even before they went into effect over concerns about how they would impact the tightly integrated supply chains that run between Canada and the U.S.

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Prime Minister Justin Trudeau initially reacted to news of the tariffs by saying “it makes no sense” for the U.S. to target imports from Canada but after securing the temporary exemption, the government has taken a softer approach.

Repeatedly, Trudeau and his cabinet ministers have stressed they are willing to work with Trump to combat attempts by countries like China to dump steel and aluminum on the North American market at unfairly cheap prices.

READ MORE: Chrystia Freeland says progress made as another round of NAFTA talks wraps up

That change in tune has also come as Canada, the U.S. and Mexico continue to negotiate towards an updated North American Free Trade Agreement (NAFTA).

A week-long series of negotiations wrapped up in Washington last week and are set to begin again on May 7.

Foreign Affairs Minister Chrystia Freeland told reporters there had been good progress made on the key issue of auto parts.

However, the lingering uncertainty over steel and aluminum tariffs remains an irritant and are coupled with the increasing pressure to get a deal done before the Mexican general election on July 1 and the U.S. mid-term elections in the fall.