Trump tosses NAFTA into the steel fire
Says tariffs will only be removed if ‘new, fair’ trade deal is signed
WASHINGTON— As far as Canada is concerned, Foreign Affairs Minister Chrystia Freeland said Monday, the matters of NAFTA and U.S. President Donald Trump’s steel and aluminum tariffs are “quite separate.” Trump disagrees. Adding still more complexity to a long and rocky NAFTA negotiation that was already proceeding slowly at best, the president said Monday that Canada and Mexico would be exempted from his threatened tariffs if and when they accepted a “fair” new version of the continental free trade pact.
The ultimatum came as another round of NAFTA talks was concluding without any major developments. While Freeland said negotiators were “beginning to make headway” on their big differences, her American counterpart, U.S. Trade Representative Robert Lighthizer, said progress in Mexico City had not met his expectations, and he warned of trouble ahead.
Still, Canada enjoyed some good news in Washington: its position on the tariffs was being pushed not only by its diplomats but by members of Trump’s own party. Offering unusually pointed criticism of the president, Senate and House Republicans urged him not to go through with his plan to apply the tariffs to every country.
Rep. Kevin Brady, chairperson of the powerful House ways and means committee, specifically called on Trump to leave Canada alone. Sen. John Cornyn, the second-ranking Senate Republican, called for committee hearings. And a spokesperson for House Speaker Paul Ryan said they are “extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan.”
But it was unclear whether their words would matter to a president who has long endorsed trade protectionism. Trump repeated his tweeted statement at an afternoon White House appearance, saying, “If they aren’t going to make a fair NAFTA deal, we’re just going to leave it this way.”
Lighthizer warned that “our time is running very short” to make a NAFTA deal. He noted that the Mexican presidential campaign and U.S. congressional midterm campaigns will soon intensify, and he suggested it would be harder to get a revised deal through the next Congress — which may be controlled by Democrats more skeptical of trade than the Republican caucus.
“I fear the longer we proceed, the more political headwinds we will feel,” he said.
In a phone call with Trump on Monday evening, Prime Minister Justin Trudeau “registered his serious concern” about the tariff plans and “emphasized that the introduction of tariffs would not be helpful to reaching a deal on NAFTA,” his office said in a summary.
Lighthizer has expressed more public frustration with Canada than with Mexico, which was initially thought to be the target of the administration’s ire. On Monday, he floated a possibility Trump has raised in the past: doing separate deals with Canada and Mexico if it proves “impossible” to preserve the 24-year-old three-country pact.
Freeland, conversely, repeated Canada’s preference to keep the continent bound together. She reiterated her statement from last week on the tariffs, calling them “absolutely unacceptable” and promising that Canada would take “appropriate responsive measures” if not protected.
Canadian trade lawyer Lawrence Herman said Trump’s linking of the tariffs to NAFTA “can’t help but hurt the negotiations.”
“It throws everything into turmoil. You can’t settle an already tense and complex set of NAFTA auto issues when exports of Canadian hot-rolled steel — a major part of vehicle production — are caught up in this latest bit of Trump unilateralism,” Herman said.
Observers were divided on the overall state of talks. Herman said, “Dark clouds have descended on this exercise. Light- hizer is trying to rush the unrushable.” Eric Miller, president of the Rideau Potomac Strategy Group consultancy, said he sees “slow, griding progress.”
Dan Ujczo, a Canada-U.S. trade lawyer at Dickinson Wright in Ohio, warned of “the U.S. getting closer to Mexico and Canada getting left behind.”
Trump’s tweets came before 7 a.m. As usual, it was not clear whether he was communicating a firm decision or a fleeting thought that had just occurred to him.
“We have large trade deficits with Mexico and Canada,” he falsely began his tweet (the U.S. has a surplus with Canada). “NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”
Some observers saw a glimmer of hope for Canada in the tweets.
Trump had not previously said he was open to exemptions for any reason. It is possible, said Miller, that the tweets suggest Trump is “feeling the heat a little bit.”
But Miller cautioned against “overreading” Trump’s words. And many pro-trade experts were aghast. The tweets appeared to undermine Trump’s own official justification for the tariffs, a national security threat from steel and aluminum imports. It seemed possible that Trump’s tweets could be used against him in a World Trade Organization complaint.