The Shack Blog

Words and things, mostly words.

President Alzheimer & NAFTA – Vol. 2

While I personally felt it was unlikely a deal would be struck in the short window allocated for negotiations, it was finally announced yesterday that the United States and Canada had failed to come to an agreement on amendments to the North American Free Trade Agreement (NAFTA). The United States had reached a preliminary agreement with Mexico the week prior, and seemed to be in a rush to get Canada to sign-on so that the deal could be sent to Congress for approval before years’ end.

The talks were derailed after “off the record” comments from Trump, initially given to Bloomberg staff, were leaked. In those comments, Trump stated that he had no intention of compromising on anything with Canada and was going to ‘force’ the country into an agreement under the threat of auto tariffs. These statements were provided off the record as Trump correctly determined that Canada would find this to be very insulting.

Talks are slated to resume next week, while Trump has continued his attempts to browbeat Canada into acquiescence, claiming he is now fine with the country knowing exactly how he feels. Trump intends to forge ahead with a bilateral deal with Mexico and terminate NAFTA, though there is a high degree of uncertainty that this is even possible without the approval of the United States Congress. Presently there is a lot of opposition to any plan that excludes Canada, from both Republicans and independent trade groups.

As such, this saga continues to develop with no clear indication as to how it will end. It seems like everyone but Trump and trade representative Robert Lighthizer is keen on a deal that includes Canada, while these two seem hellbent on pursuing an outright hostile trade policy. I’m not even a proponent of NAFTA itself, but taking a sledgehammer to this continent’s trade policy — which has shaped and guided the deep integration of supply chains for almost 2 decades — seems reckless and fraught with unintended and unforeseen consequences.

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