The vise tightens on Canada's Justin Trudeau as Trump upgrades Mexico NAFTA
President Trump sold himself to the American public as the master of the art of the deal, and, well, gulp, we see it.
Seems the squeeze is on for Canada's lefty prime minister, Justin Trudeau, the guy who tried to pull a fast one on Trump in Quebec ahead of his Singapore summit with North Korea's Kim Jong-un earlier this summer. The Mexico upgrade deal on NAFTA, which is about to be announced, according to a top story on Drudge, gets Mexico squared away and leaves Canada's P.M. to face Trump alone.
Trump, being a dealmaker, seems to have gotten a better deal for U.S. companies and workers with Mexico, something extraordinary, given the negative rhetoric that has flowed over illegal immigrants from both sides of the border, and given the perception that Trump is anti-free trade. Well, no. There's now a deal about to be announced.
According to the Los Angeles Times, via the Virginian-Pilot:
Reaching an agreement with Mexico would mark a breakthrough for the administration after a year of roller-coaster talks and tension with its longtime North American trading partners. President Trump has frequently threatened to withdraw from NAFTA, linked the renegotiations to his call for a wall along the U.S.-Mexican border and slapped tariffs on Mexican and Canadian steel to apply pressure to make concessions.
But both Mexico and the U.S. have strong incentives to push through a deal quickly. Mexico wants to lock in an agreement before its new leftist president takes office, and the White House is keen on achieving a win on trade ahead of the midterm elections.
The heaviest changes will be to auto rules, an interesting thing, given that Mexico's new incoming president, Andrés Manuel López Obrador, as a former mayor of Mexico City and conversant in the surrounding Mexico state where the auto plants are, would be well familiar with the auto trade and its importance to Mexico. I suspect he'd support getting Trump out of his hair on his one, along with outgoing president Enrique Peña-Nieto, so I am going to predict that this goes through. The other thing, not mentioned in the LAT piece, is that Trump is going easy on Mexico's farm trade, given that farms in Mexico harvest their crops at a slightly different time of year from farms in the U.S., meaning that the fresh products don't overlap that much on store shelves. Besides that, out-competing Mexico's farms and putting them out of business means Mexican farm labor...will head north. We get it.
Some smart choices have been made.
That leaves Trudeau, and the LAT says he's been caught flat-footed:
Canada, meanwhile, has shown less urgency to complete a revision of the 24-year-old pact, but is expected to return to the bargaining table once the U.S. and Mexico settle their differences.
Bloomberg says he's been "frozen out":
"The Trump administration has clear frustrations with the Canadian government's approach to the Nafta modernization, and we're now seeing it play out in front of our faces," Adam Taylor, principal and co-founder at trade advisory firm Export Action Global, said by phone from Ottawa. "We've seen virtually overnight Mexico and the U.S. are moving forward and Canada looks left behind and then forced into a position where it has to make a significant set of concessions just to be readmitted to the talks, it seems."
With a Mexico deal in hand, Trump will be that much better placed to get the deal he wants from Canada. The LAT says the issues at stake are the U.S. need to get into the Canadian milk market and Canada's capacity to challenge U.S. anti-dumping claims in international courts. The other big one, not noted, is that Chinese manufacturers are skirting U.S. trade restrictions put on from their own failure to open their markets, by bringing goods into Canada and adding some minimal value, so as to get them labeled Canada goods. Something on that front is likely to be on Trump's agenda for Trudeau to address.
What it shows is how clever Trump is in maneuvering a deal with allies, who he says have run circles around us. There does seem to be an endgame here, and America seems to be about to come out a winner.