Trump Signals He Wants Separate Trade Deals With Canada and Mexico

WASHINGTON — The Trump administration added another complication to already fractious talks with Canada and Mexico on Tuesday, suggesting that President Donald Trump now wants to negotiate separate bilateral deals with those nations rather than continue three-country discussions to rewrite the North American Free Trade Agreement.

“His preference now, and he asked me to convey this, is to actually negotiate with Mexico and Canada separately,” Larry Kudlow, the White House chief economic adviser, said of the president on “Fox & Friends” on Tuesday morning.

Kudlow said pursuing separate deals might allow an agreement to be reached “more rapidly,” adding: “I think that’s the key point. You know, NAFTA has kind of dragged on.”

The comments echo previous musings by Trump and are only likely to inflame tensions with Canada and Mexico, which are already reeling from Trump’s imposition of steel and aluminum tariffs and his suggestion that tariffs on autos might come next. Relations with Canada and Mexico are more strained than at any time during the president’s tenure, and the clock has essentially run out for the administration to secure a NAFTA deal this year.

Canada and Mexico have opposed the idea of separate treaties as cumbersome and an unnecessary complication of a pact that many North American businesses rely on for sales and production.

Kudlow insisted that the president was not planning to withdraw from NAFTA. However, splitting the current trilateral deal into two separate bilateral agreements would likely require nullifying the 25-year-old agreement.

The president has frequently threatened to withdraw from NAFTA to put pressure on his opponents in the negotiation and on Friday, Trump said he would be interested in pursuing separate deals. “These are two very different countries,” he said.

“I like free trade but I want fair trade,” Trump said, adding, “They cannot believe they’ve gotten away with this for so many decades.”

The Trump administration had been trying to conclude NAFTA talks by the end of May to submit the deal for a vote in the current Republican-controlled Congress. But the three countries have remained at an impasse over significant provisions, including manufacturing rules for autos and a U.S. proposal for a five-year sunset clause that would cause the deal to automatically expire unless the countries voted to renew it.

Given the statutory deadlines the administration must meet to get a trade deal approved, it now appears likely that any vote would drag into next year, after midterm elections that could shift the political makeup of Congress.

Last week, the Trump administration hit Canada and Mexico with steel and aluminum tariffs, the product of a national security-related investigation that both countries view as an affront to their close alliances. The levies, which took effect June 1, have further chilled relations, with Canada and Mexico vowing retaliation on U.S. producers.

Trump’s strategy in the negotiations with Canada and Mexico has drawn criticism from the business community as well as Democrats and Republicans.

A spokeswoman for Rep. Kevin Brady, R-Texas, the chairman of the Ways and Means Committee, said Tuesday that Brady opposed splitting the negotiations in two.

“A NAFTA without both Canada and Mexico included is no longer a North American Free Trade Agreement,” spokeswoman Julia Slingsby said. “Chairman Brady believes one free trade agreement with Canada and Mexico is best for America. It provides the most certainty for American companies and is the best way we can sell ‘Made in America’ products.”

And a survey of chief executive officers released Tuesday morning by Business Roundtable showed that while executives have a positive view of the economy, they see the administration’s trade policy and the prospect of retaliation from other countries as an escalating risk to their businesses. Joshua Bolten, president of Business Roundtable, said that uncertainties about trade policy were “a growing weight on economic progress — especially amid escalating trade tensions. America’s current and future economic vitality depends on productive talks with China and a successful modernization of NAFTA.”

Sen. Orrin G. Hatch, R-Utah, the Finance Committee chairman, urged Trump’s team to be patient in the ongoing NAFTA negotiations, in a statement last month. “It is critical that the administration takes the time necessary to get these negotiations right,” Hatch said. “I believe the administration understands that.”

Kudlow’s comments triggered an immediate jump in the value of the dollar against the Mexican peso and the Canadian dollar, a sign of investor concern about the strength of those countries’ economies.