Clock ticks on U.S. bid at rewrite of NAFTA
WASHINGTON — President Donald Trump’s team is running out of time to rewrite a trade pact with Canada and Mexico this year just as it’s confronting China and sparring with its allies over U.S. tariffs on imported steel and aluminum.
If negotiators can’t agree on a revamped North American Free Trade Agreement soon — House Speaker Paul Ryan set an informal Thursday deadline — the talks could drag into 2019. Or Trump could carry out his threat to abandon the agreement he’s labeled a job-killing “disaster” and throw commerce among the three NAFTA countries into disarray.
“The window is closing rapidly,” said Dan Ujczo, a trade lawyer at Dickinson Wright in Columbus, Ohio.
NAFTA is hardly the only urgent item on the administration’s trade agenda. Trump was expected to meet Thursday with China’s Vice Premier Liu He to try to avert a trade war. Liu will also meet with a U.S. team led by Treasury Secretary Steven Mnuchin.
The U.S. and China, locked in a conflict over Beijing’s demand that American companies turn over technology to gain access to the Chinese market, have threatened to slap tariffs on $50 billion of each other’s goods. And Trump has asked U.S. Trade Representative Robert Lighthizer to find an additional $100 billion in Chinese products to tax.
The prospect of a trade war between the world’s two biggest economies has unnerved global markets and alarmed major companies.
“The stakes are too high for these talks to fail,” said Christine McDaniel, a senior research fellow at George Mason University’s Mercatus Center. “The U.S. economy, its firms, its workers, and its people all depend on being able to buy and sell with their counterparts at home and across the globe every day.”
Talking to reporters Thursday, Trump downplayed the prospect of a successful negotiation with Beijing.
“Will that be successful?” he asked. “I tend to doubt it.”
Trade sanctions could disrupt business between the countries and potentially threaten jobs. Consumers would be hurt by higher prices for imported products hit by tariffs.
In the meantime, Japan, a staunch U.S. ally, is threatening to go to the World Trade Organization to protest Trump’s tariffs on imported steel and aluminum. The president imposed the tariffs in March, arguing that reliance on imported metals posed a threat to America’s national security. He exempted the European Union, Canada, and Mexico — but not Japan — until June 1.
The steel and aluminum tariffs have antagonized traditional American allies. Those counties want permanent exemptions from the tariffs. Or they want them withdrawn altogether. Donald Tusk, president of the European Council, tweeted Monday of the United States that “with friends like that who needs enemies.”
Trump is seeking to revamp NAFTA to try to return auto production to the United States and shrink America’s trade deficit.
The United States is demanding that a percentage of a car’s content originate in a country — the United States or Canada — with average auto worker wages of around $15 an hour to qualify for NAFTA’s dutyfree status.
But companies have built complicated supply chains that straddle NAFTA borders. In doing so, they took advantage of each country’s strengths — cheap labor in Mexico, for example, and skilled workers and proximity to customers in the United States and Canada. Changing the rules, manufacturers warn, would disrupt their operations, raise their costs and put them at a competitive disadvantage with manufacturers in Asia and Europe.
“We are running out of time,” said Rep. Will Hurd , a Republican whose Texas district borders Mexico and benefits from NAFTA. “But I think the deadline is not necessarily today.”
President Trump’s team is running out of time to get a NAFTA rewrite done in time for a vote by Congress.