President Donald Trump needed a win this week and in true Trump fashion, he manufactured one. The President on Monday announced “one of the largest trade deals ever made” after his administration agreed, in kind, to a manufacturing agreement with Mexico.
The “deal” Trump is referring to is, in reality, a preliminary agreement that would supplant the North American Free Trade Agreement [NAFTA]. On paper that probably sounds great to Trump, however, without trilateral participation from Canada, the President has reached less of a deal and more of a pact with one of only two parties that need to engage for an actual reworking of NAFTA.
Trump was forced to suspend his own personal trade talks with Canada after both countries refused to budge. The President then packed his bags and headed to Mexico in the hopes of ironing out the details of a new deal.
On Monday, Trump wrote: “This is one of the largest trade deals ever made. Maybe the largest trade deal ever made.”
Let’s put aside for a moment the absurd notion that Trump’s deal is perhaps one of the largest ever made and focus on what it actually entails.
The talks focused on revising a single section of NAFTA with the hopes that the third party involved in the free trade agreement will come to the table and agree in kind to the revision that was negotiated with the poorest of the three countries. Even Trump’s own administration calls the deal a “preliminary agreement in principle.”
Trump is so desperate for a win that he even claims this week that “we haven’t started with Canada yet.” That, despite the fact that U.S. officials, without Trump’s input, have been in talks to renegotiate NAFTA for more than a year.
The 45th POTUS wants us to believe a deal is all but complete while Mexico’s own president, Peña Nieto, mentioned several times during a speakerphone call to Donald Trump that he wants Canada involved before anything is finalized.
A spokesperson for Canadian Foreign Minister Chrystia Freeland released this statement:
“We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”
It’s possible that Nieto is attempting to rush through the process in the hopes of ratifying a deal before President-elect Andrés Manuel López Obrador takes office on Dec. 1.
If Nieto thinks he’s going to rush through a new agreement at a time when the United States has waged a trade war against Canada, he’s in for a rude awakening.
Making matters worse, at least in terms of optics, Trump’s own administration admits that the 16-year manufacturing deal it has worked out with Mexico will increase the cost of manufactured goods for Americans.
The 2018 mid-term elections are right around the corner and passing a trade agreement that is guaranteed to raise the cost of goods for Americans could be political suicide for Republicans who are currently holding several hotly contested seats. However, waiting until the Democrats potentially take the U.S House poses a risk of its own. The catch-22 game the GOP is now forced to play could send NAFTA in either direction, at least in the short term.
That’s not to say NAFTA doesn’t need to be reworked for the 21st century. The agreement is outdated and could definitely benefit from needed revisions. However, Donald Trump’s take it or leave it style of negotiations could hamper a new deal — when a new trilateral trade deal actually materializes.