The Art of The Deal? Trump Turning up Heat on Canada Over Trade

by: The Knowledge Group

September 19, 2018


Has a major setback now stymied President Trump’s North American Free Trade Agreement revision plans?

The media recently reported a comment, which Trump claims to have made off-record, stating an intention not to compromise with Canada. Canada’s Foreign Minister, Chrystia Freeland, won’t comment on Trump’s remarks, although they imply Trump’s willingness to cut Canada out of NAFTA.

Congress over the next three months will re-write NAFTA, trying to hammer it out before Enrique Peña Nieto leaves the Mexican presidency on the 1st of December. Deleting Canada would leave Congress with a much more complicated process.

Trump deems the 1994 NAFTA deal bad for the United States and a reason for manufacturing job losses to Mexico. Trump is also dissatisfied with the current provisions for trade with Canada in the dairy sector, as well as intellectual property provisions and dispute resolution rules. And, in what will prove to be either the art of the deal or of no deal, Trump continues to press Canada economically, with tariffs, to try to extract concessions. Cars and car parts imported from Canada could be the next tariff target.

Prevailing View: A Trilateral Agreement Will Emerge

Mexico and many U.S. Republican legislators have stated they still expect a trilateral agreement. As Canada is the key export market for U.S. goods, keeping Canada within the deal is economically critical.

Yet Canada has bristled at Trump’s adversarial stance. The Trudeau administration created tariffs on U.S.-made goods to retaliate for Trump’s tariffs on Canada’s metals.

Trump’s posture makes sense to readers of The Art of the Deal, which journalist Tony Schwartz co-authored with Trump in 1987, Paul Ashworth at Capital Economics believes. The book’s business advice urges the reader to consider a zero-sum concept of agreements, in which other parties are adversaries to be kept off-balance and pressured into giving up leverage.

Leaders in France, China, and other countries are looking at The Art of the Deal, and adopting a retaliatory approach, in order to give themselves leverage in their dealings with the United States.


Related Webcast: Trump’s Steel and Aluminium Tariffs: The Good, The Bad and The Ugly (Recording)

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