Trump sours flagging NAFTA talks with steel trade war
threats
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[March 03, 2018]
By Dave Graham and Sharay Angulo
MEXICO CITY (Reuters) - U.S. President
Donald Trump's threats to unleash a trade war over steel crushed hopes
of substantial progress in the latest talks to rework NAFTA, heightening
fears for the trade deal's future.
Trump said on Thursday that a plan for protectionist tariffs of 25
percent on steel imports and 10 percent on aluminum goods would be
announced next week, following up on Twitter on Friday by calling trade
wars "good, and easy to win."
Trump's statements have blunted efforts to renegotiate the 1990s-era
North American Free Trade Agreement, which had already been disrupted by
the early departure of a U.S. official handling one of the most divisive
subjects, content rules for autos.
Asked how NAFTA negotiators could be working in good faith to update the
deal while Trump talked approvingly about trade wars, a well-placed
Canadian source replied: "That's a very good question. I don't think
there's an answer yet."
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Jerry Dias, head of Canadian private-sector union Unifor, said after
meeting with Canada's chief negotiator on Friday that Trump's latest
gambit to push his "America First" strategy immediately soured the
negotiations.
"The Canadian team is absolutely furious," Dias told Reuters, saying
Canada should walk away from the talks if it did not receive an
exemption. He likened the Trump administration to a schoolyard bully.
"Ultimately Canada's going to have to start fighting fire with fire," he
told reporters.
One Mexican official familiar with the process gave a terse appraisal of
how Trump's announcement went down at the talks.
"Very bad news, very bad timing, very dangerous to go down this road,"
the official said.
Trade officials have become used to tensions sparked by Trump, and
Mexico's chief NAFTA negotiator Kenneth Smith said the talks had not
been affected by the steel announcement.
However, he said Mexico and Canada should be exempted from the measures
as NAFTA allies of the United States.
It remains unclear whether the metals tariffs would apply to the United
States' partners under NAFTA, which together account for more than $1
trillion worth of annual trilateral trade.
Canada, the biggest foreign supplier of steel and aluminum to the United
States, is looking at ways to impose immediate sanctions on the United
States if necessary, said the Canadian source.
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![](../images/030318pics/busine71.jpg)
Jerry Dias, head of Canada's private sector union Unifor, speaks to
journalists at a news conference in the hotel where the seventh
round of NAFTA talks takes place, in Mexico City, Mexico March 2,
2018. REUTERS/Edgard Garrido
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Mexican officials said the government would likely wait for clarity on the
matter before responding, but one said earlier this week that Mexico would hit
back if subject to U.S. tariffs.
POLITICAL WILL
Officials say a handful of less contentious NAFTA chapters could still be
concluded during the latest round of talks, and three people at the talks said
the technical teams remained focused on their tasks, despite the uncertainty the
steel tariff plan had caused.
Negotiators from the three countries have been meeting for six months and made
few concrete announcements.
Expectations of progress at the seventh round in Mexico City had already been
tempered by the conviction that major problem areas were unlikely to be removed
without the mediation of senior political figures.
The risk of a tariff war between the NAFTA partners threw up new roadblocks.
Mexican steel industry association Canacero said it expected the government to
take "immediate reciprocal actions" if the United States slapped the tariffs on
Mexico, and agricultural lobbyists at the NAFTA talks also condemned the tariff
plan.
Trump has repeatedly threatened to pull out of NAFTA if the deal is not recast
to his liking, arguing that it has caused an exodus of U.S. manufacturing jobs
to lower-cost Mexico.
Blindsided by Trump's steel announcement, participants at the talks are looking
ahead to Monday's scheduled meeting between U.S. Trade Representative Robert
Lighthizer, Canada's Foreign Minister Chrystia Freeland and Mexico's Economy
Minister Ildefonso Guajardo for clarity on the path forward.
"It's not a question of what's achievable. Of course it's achievable," said one
industry executive in Mexico close to the negotiations. "It's a question of
political will."
(Additional reporting by Lesley Wroughton, David Alire Garcia, David Ljunggren
and Frank Jack Daniel; Editing by Grant McCool and Tom Brown)
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