President Trump said on Saturday there was no need to keep Canada in NAFTA, slammed the US neighbor's "decades of abuse" while warning Congress not to meddle with the trade negotiations or he would terminate the trilateral trade pact altogether one day after trade talks with Canada collapsed hours before a deadline.
"There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out,” Trump tweeted on Saturday. "Congress should not interfere w/these negotiations or I will simply terminate NAFTA entirely & we will be far better off."
There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off...— Donald J. Trump (@realDonaldTrump) September 1, 2018
Late on Friday, Trump notified Congress of his intent to sign a bilateral deal with Mexico and would include Canada “if it is willing." On Monday, Trump unveiled a surprise bilateral deal with Mexico.
As discussed earlier, Trump’s notification of Congress that he planned to sign a deal with Mexico in 90 days appeared to avoid what many in the U.S. business community and Congress had seen as a worst-case scenario. But according to Bloomberg, Saturday’s tweets opened the door again to that outcome.
“We were far better off before NAFTA -- should never have been signed. Even the Vat Tax was not accounted for. We make new deal or go back to pre-NAFTA!” Trump said.
....Remember, NAFTA was one of the WORST Trade Deals ever made. The U.S. lost thousands of businesses and millions of jobs. We were far better off before NAFTA - should never have been signed. Even the Vat Tax was not accounted for. We make new deal or go back to pre-NAFTA!— Donald J. Trump (@realDonaldTrump) September 1, 2018
The threat echoed what the president said earlier in the week when he warned he would forge ahead with a bilateral trade agreement with Mexico that would leave out Canada, which he on Friday again accused of "ripping us off."
“We can’t have these countries taking advantage of the United States,” Trump told a rally in North Carolina.
While the two sides failed to meet a deadline set by the White House, both U.S. and Canadian negotiators insisted that they were making progress. They also announced that they would resume talks on Wednesday after four days of intense negotiations in Washington ended without a final agreement.
While Trump's negotiating tactics may yet prove successful, there is also a risk that the president antagonizes Ottawa enough to lead to a substantial decline in the trade relationship, one which is critical for the US as Canada remains the biggest buyer for more US states' exports:
Meanwhile, by sending the notification to Congress, Trump effectively "reset the clock" for the Nafta negotiations. Under rules set by Congress, the administration is now facing a 30-day deadline to provide a full text of the agreement. Because of that, negotiations could still drag on for not just days but weeks even as both U.S. and Canada are facing their own pressures.
U.S. business groups welcomed the signs of progress but made clear that they would oppose any deal that did not include Canada.
“Anything other than a trilateral agreement won’t win Congressional approval and would lose business support,” the U.S. Chamber of Commerce said in a statement.
Speaking to Bloomberg, Carleton University political scientist Laura Macdonald said despite the rhetorical pressure from Trump, the negotiations still appeared to be proceeding remarkably normally. But the limits of Trump’s leverage were also becoming clear with the president still needing to get any agreement through a Congress that has concerns about any pact that does not include Canada.
“Trump is making it blatantly obvious who has the most power in this situation, but he doesn’t have complete power: Congress has a role to play,”
Congressional support could be further impaired since any vote in U.S. Congress is unlikely to take place before 2019. By then, the Democrats will likely regain control of the House, and Nancy Pelosi, the minority leader in the House of Representatives, made clear on Friday that any deal must include Canada. "Actually fixing Nafta requires reaching a trade agreement with both Mexico and Canada,” she said. “Without a final agreement with Canada, the administration’s work is woefully incomplete."
Separately, Trump’s leaked "off the record" comments to Bloomberg and continuing vitriol toward Canada has complicated the politics for Canadian Prime Minister Justin Trudeau, who on Friday said he’ll only sign an agreement that’s right for his country.
Trudeau reiterated his government wouldn’t concede to U.S. demands to dismantle its dairy system, known as supply management. Talks were also hung up on U.S. insistence to eliminate dispute-resolution panels that Ottawa considers essential, Canadian officials said on Friday.