ARI SHAPIRO, HOST:
There's one more complication to the trade deal talks with Canada. What happens with steel imports? President Trump imposed tariffs on steel and aluminum imports earlier this year, and Canada was the country most affected. NPR's Jim Zarroli reports it's still a sticking point.
JIM ZARROLI, BYLINE: It's only been six months, but President Trump says the tariffs he imposed on imports have led to a dramatic reversal in the beleaguered American steel business. Here he was at last night's rally in Indiana.
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PRESIDENT DONALD TRUMP: I'll tell you what. Steel - we were dead. It was over. Now we're going to be using our minds. We're going to be - we're opening up. We're like - it's the hottest thing that's happening.
ZARROLI: It's clear that the tariffs have already meant higher profits for companies such as U.S. Steel, but they have come at a cost to U.S. relations with its two nearest neighbors. Trump said the U.S. needs a strong steel industry to protect itself, and he justified the tariffs out of national security concerns. That came as a surprise to Canada, which is not only a loyal ally but America's largest trading partner.
JENNIFER HILLMAN: Obviously it's a huge problem for both Mexico and Canada. I mean, Canada is our No. 1 supplier of steel and our No. 1 supplier of aluminum.
ZARROLI: Jennifer Hillman is a professor of law at Georgetown University.
HILLMAN: So it affects both the steel and aluminum products on their own as well as all of the products into which the steel and the aluminum is used.
ZARROLI: The tariffs, she notes, pose a particular threat to the auto industry and its elaborate cross-border supply chains. Trump often uses the threat of trade sanctions as a negotiating tactic. Hillman says the Trump administration has sometimes indicated it may eliminate the steel and aluminum tariffs as part of the broader NAFTA talks.
HILLMAN: There was always the suggestion from the beginning that the tariffs would be applied until something else was worked out.
ZARROLI: But Canadian Foreign Minister Chrystia Freeland said today that the steel tariffs aren't part of the talks. She called the tariffs illegal and unjustified. The impact of the tariffs hasn't really shown up in economic data so far, but there's plenty of anecdotal evidence that manufacturers are being hurt. Hundreds of American companies have asked for exemptions from the tariffs, warning they'll have to pass on the higher costs to their customers. Christine McDaniel is an economist at the Mercatus Center at George Mason University.
CHRISTINE MCDANIEL: A lot of these manufacturers are hesitant to speak up too publicly, but they are eager to tell their representatives and their senators, you know, what their experiences are.
ZARROLI: That's clearly putting pressure on Congress to resolve the trade disputes. But there's no sign yet that the Trump administration is ready to give up any ground. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.