Trump's 'bullying' could kill off the very trade deal he created

In 2018, the Trump administration spearheaded the formation of the United States–Mexico–Canada Agreement (USMCA) to supplant the North American Free Trade Agreement (NAFTA), with the former officially replacing the latter in 2020. At the time, President Donald Trump hailed it as a major trade victory, even though the new agreement wasn’t radically different from the old one, with arguably the most notable change being the inclusion of a “sunset” provision requiring a formal review in six years.

Now that six years are up, and with less than two months for the three countries to renegotiate, NOTUS reports that “business and political leaders are bracing for another Trump administration-style trade showdown.” And this time around, the key obstacle to reaching an agreement has less to do with commerce than it does Trump’s “bullying” approach to Canada, as “America has iced out Canada in the trade talks.” According to experts, “it’s unclear whether this is a negotiating tactic… or a sign of a more serious fissure between the United States and Canada that could jeopardize a new agreement.”

“It’s classic Trump bullying,” said Clinton administration Commerce Under Secretary William Alan Reinsch. “What you’re going to see between now and July 1 is a lot of drama, a lot of threats, threats to withdraw, threats to break it up, threats to negotiate separately, threats to exclude one or the other, and then maximal demands on what he wants to concede.”

Over the course of his second term, Trump has made Canada a primary target of his tariff policies in an attempt to secure wide-ranging concessions. This prompted Canada to level retaliatory policies, such as an embargo on American spirits in government-run liquor stores, which has drawn the ire of U.S. Trade Representative Jamieson Greer, who in April told the House Ways and Means Committee, “Think about it this way: There are two countries that have retaliated economically against the United States in the past year, the People’s Republic of China and Canada. That’s kind of the company that they’re running in.” Greer was ignoring the fact that it was the Trump administration that raised new tariffs in the first place.

While Greer has said that he supports the extension of the USMCA and that Congress would be notified of the administration’s intentions on the deal by June 1, he also admits that he expects negotiations to extend beyond the deadline.

“If all parties can come to an agreement,” explained NOTUS, “the USMCA will be extended for 16 more years. If all parties fail to reach an agreement, it would trigger up to 10 years of annual negotiations, a situation that business leaders warn would inject a massive amount of uncertainty into the North American trade landscape.”

“It wouldn’t be as bad as if [Trump] withdrew. It would be bad because of the uncertainty it creates. What this agreement has really been about, and NAFTA that preceded it, it’s really been about investment,” said Reinsch. “What NAFTA did, and what USMCA has continued to do, is reassure all three business communities that you can safely invest in all three countries, and make sure that your assets are going to thrive.”

Trump has called the USMCA “irrelevant,” one former U.S. trade official-turned-trade lobbyist noted, and therefore, business leaders are preparing for policy changes and the precarity that will follow. While a bipartisan group of lawmakers has pressed the president to extend the agreement, his statements on the issue inspire little confidence.

“I don’t even think about USMCA,” Trump said at a Michigan Ford plant in January.

“It’s just going to be a series of threats,” said Reinsch. “That’s the way he operates. I think the other countries have figured that out by now, and so we just have to see how it plays out.”

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