U.S. AUTO INDUSTRY ‘FREAKING OUT’ OVER POSSIBLE TARIFFS.

Recession would likely follow, says U.S. industry

WASHINGTON • Canada wants more from its negotiating partners before signing on to a revamped North American Free Trade Agreement, Prime Minister Justin Trudeau suggested Wednesday as his well-travelled foreign affairs minister resumed her place at the talks in Washington.

The extended NAFTA talks and the possibility of Donald Trump carrying out his threat to impose tariffs on cars imported into the U.S. has the American auto industry “freaking out,” the head of the largest auto retailer in the country said Wednesday.

“Everyone in the automobile industry — doesn’t matter if you’re a retailer, a supplier or a manufacturer — is freaking out around tariffs on automobiles,” Mike Jackson, chairman and chief executive officer of Autonation Inc., said Wednesday on Bloomberg Television. “The price point is so big, we all know it would be extremely disruptive, extremely expensive to the industry and most likely knock the economy into some sort of recession because it’s so inflationary.”

Jackson, who is also chairman of the Federal Reserve Bank of Atlanta, said he hopes trade deals can be reached with Canada, Europe, and Mexico that will avoid auto tariffs that Trump said could be as high as 30 per cent on vehicles imported into the U.S.

The president has already imposed tariffs on foreign steel and aluminum, as well as a variety of goods from China.

“Auto tariffs would make steel and aluminum tariffs look like a company picnic,” Jackson said. “It is the big one. So it’s incomprehensible that there won’t be a solution around this whether it’s with the Europeans or within” the North American Free Trade Agreement.

Meanwhile, Chrystia Freeland, after arriving in the U.S. capital in a T-shirt emblazoned with the slogan, “Keep Calm and Negotiate NAFTA,” sounded a contemplative note as talks began, thanking journalists for keeping vigil and ordinary Canadians for their expressions of support.

“People come up to me on the street or in airports, which is where I am often found, just saying how strongly they support Canada in these complex negotiations,” Freeland said before departing midday for a meeting with Ontario Premier Doug Ford.

Her reflective mood had some wondering whether a breakthrough was nearly at hand — a notion one insider wasted little time in batting down.

“No,” said the source, speaking freely in exchange for anonymity. “Not at all.”

Then there was the allnighter pulled by one of Canada’s negotiating teams, which Freeland said didn’t wrap up its marathon session until 7 a.m. Wednesday morning. “There is some very intensive work happening,” she acknowledged as she thanked negotiators, too, for their tireless efforts.

Earlier in the day in Ottawa, Trudeau said Canada isn’t backing down from its own demands — a position that has some U.S. legislators bristling at what they consider a stalling tactic.

“We’ve been very clear that we’re interested in what could be a good deal for Canada, but we’re going to need to see a certain amount of movement in order to get there,” Trudeau said.

Pressure is mounting on the federal government to get a deal done. On Wednesday, Texas Republican Kevin Brady, head of the influential House Ways and Means committee, told CNBC the two sides are “close enough” and time has come for Canada to “step it up” and get on board.

Trade observers say that while many in Congress want Canada to be part of a threeway deal, they may not be willing to sacrifice an agreement in principle between Mexico and the U.S. negotiated earlier this year.

That deal is widely seen to require congressional approvalbefore dec .1 in order to survive the arrival of an incoming Mexican government whose supporters have mixed feelings about the agreement.

Canada, meanwhile, has been pushing back against deadlines declared by the Trump administration — first the end of August, then the end of September.

Trudeau has vowed to protect Canada’ s supply management system for dairy and poultry products against U.S. demands for greater access to Canada’s dairy market. Sources say Canada has offered some limited concessions on access while also ring-fencing the system itself.