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MarketScreener Homepage  >  Equities  >  Tokyo  >  Toyota Motor Corp    7203   JP3633400001

TOYOTA MOTOR CORP

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U.S. lifts tariffs on Canadian, Mexican metals in boost for trade pact

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05/17/2019 | 09:10pm EDT
Flags of the U.S., Canada and Mexico fly next to each other in Detroit, Michigan

WASHINGTON/OTTAWA (Reuters) - The United States struck deals on Friday to lift tariffs on steel and aluminum imports from Canada and Mexico, the three governments said, removing a major obstacle to legislative approval of a new North American trade pact.

The separate agreements, which will not impose U.S. quotas on Canadian and Mexican metals shipments, will also eliminate Mexican and Canadian retaliatory tariffs on a broad range of U.S. products, including pork, beef and bourbon.

The United States and Canada said their agreement will be implemented by Sunday afternoon, and includes new curbs aimed at preventing dumped steel and aluminum from China and other countries from entering the U.S. market via Canada.

President Donald Trump had imposed the global "Section 232" tariffs of 25% on steel and 10% on aluminum in March 2018 on national security grounds, invoking a 1962 Cold War-era trade law.

Both Canada and Mexico argued for 14 months that their metals industries posed no security threat as their economies are integrated with the United States, and challenged the tariffs before the World Trade Organization.

"This is just pure good news for Canadians," Canadian Prime Minister Justin Trudeau told reporters after announcing the deal to workers at Stelco Holdings Inc's steel mill in Hamilton, Ontario.

Stelco shares soared 11 percent on the news, while top U.S. steelmaker Nucor fell 3.1 percent and U.S. Steel Corp, which had seen massive profit improvement because of the tariffs, fell 1.2 percent.

Spokesmen for U.S. Steel and Nucor, which had advocated for maintaining strong tariff protections, could not be reached for comment.

TRADE DEAL VOTE

The metals tariffs were a major irritant for Canada and Mexico and had caused them to halt progress toward ratification the new U.S.-Mexico-Canada Agreement, the trilateral trade deal to replace the 25-year-old North American Free Trade Agreement.

U.S. lawmakers with constituents suffering from Canadian and Mexican retaliation, including Senate Finance Committee Chairman Chuck Grassley, also said they would not consider a USMCA vote with the tariffs in place.

After the deal, Grassley tweeted: "Thank u Mr President for really helping the farmers of Iowa w this important step in USMCA. w lifting metal tariffs @realdonaldtrump just proved he can deliver on negotiations. China ought to take note/start dealing in good faith & take Pres Trump seriously."

Trudeau said Canada would now work with the United States on the timing of USMCA ratification and said he was optimistic Canada would be "be able to move forward well in the coming weeks".

U.S. Vice President Mike Pence said he would meet with Trudeau in Ottawa on May 30 to discuss "advancing" ratification.

Several U.S. Democrats applauded removal of the tariffs, but said USMCA was not yet ready for their support.

"When it comes to the new agreement, House Democrats continue to have a number of substantial concerns related to labor, environment, enforcement, and access to affordable medicines provisions. Those issues still need to be remedied," said House Ways and Means Committee Chairman Richard Neal.

Neal added that the deal does not address global steel overcapacity and criticized Trump's handling of trade negotiations with China, which deteriorated significantly in the last two weeks.

Trump, speaking to realtors in Washington, called the pact "a fantastic deal for our country" and said Congress would hopefully approve the USMCA quickly. "Then the great farmers and manufacturers and steel plants will make our economy even more successful than it already is."

Jesus Seade, Mexico's deputy foreign minister for North America, said the deal "measurably increases the probability" the USMCA will be approved before the U.S. Congress' summer break in August. Some U.S. lawmakers say passage would become more difficult after the recess due to budget battles expected in the fall and increased 2020 presidential campaign activity.

TRANSSHIPMENTS, SURGES

Trump's metals tariffs have been largely aimed at keeping excess production from China out of the U.S. market, and the deal includes a new monitoring mechanism aimed at preventing steel and aluminum from China and other countries from being transshipped through Canada and Mexico to the United States.

But the U.S. Trade Representative's office also said the deal allows it to reimpose tariffs in the event of "surges" in imports of specific steel products. If tariffs are reimposed, retaliation would be limited to the steel and aluminum sectors.

Carmakers, which have announced hundreds of millions of dollars in higher U.S. costs due to the tariffs, praised the deal and said it brought USMCA passage a big step closer.

"While many automakers already source the vast majority of their steel and aluminum domestically, tariffs drive those prices up which decreases investment and harms auto workers and ultimately consumers," said the Alliance of Automobile Manufacturers, a trade group representing most major brands including General Motors Co, Toyota Motor Corp Volkswagen AG and others.

The National Pork Producers Council, which says retaliatory tariffs have cost its members $12 per animal, or a total of $1.5 billion, also expressed relief at the end of "a trade dispute that has placed enormous financial strain on American pork producers."

(Additional reporting by David Shepardson, Andrea Shalal and Doina Chiacu in Washington and Anthony Esposito and Stefanie Eschenbacher in Mexico City; Writing by David Lawder; Editing by Susan Thomas and Tom Brown)

By David Lawder and Steve Scherer

Stocks mentioned in the article
ChangeLast1st jan.
FORD MOTOR COMPANY -1.20% 9.85 Delayed Quote.33.86%
GENERAL MOTORS CORPORATION -1.18% 35.13 Delayed Quote.6.28%
NUCOR -2.82% 51.39 Delayed Quote.2.07%
STELCO HOLDINGS INC -7.38% 16.68 Delayed Quote.19.59%
TOYOTA MOTOR CORP 0.12% 6499 End-of-day quote.5.16%
UNITED STATES STEEL CORPORATION -3.86% 13.7 Delayed Quote.-21.88%
VOLKSWAGEN -1.59% 142 Delayed Quote.3.87%
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Financials (JPY)
Sales 2020 30 361 B
EBIT 2020 -
Net income 2020 2 325 B
Debt 2020 15 623 B
Yield 2020 3,72%
P/E ratio 2020 7,99
P/E ratio 2021 7,52
EV / Sales 2020 1,21x
EV / Sales 2021 1,18x
Capitalization 21 180 B
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Number of Analysts 22
Average target price 8 103  JPY
Spread / Average Target 25%
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Managers
NameTitle
Akio Toyoda President & Representative Director
Takeshi Uchiyamada Chairman
Koji Kobayashi CFO, Representative Director & EVP
Shigeki Terashi Director & Executive Vice President
Shigeru Hayakawa Vice Chairman
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HONDA MOTOR CO LTD1.13%46 495