Treasury’s Mnuchin Hopeful Trade Deal With Canada Will Get Done

But trade was the major driver of Monday's gains as President Trump announced from the Oval Office soon after 11 a.m. EST that the U.S. and Mexico reached an agreement.

At the same time, President Donald Trump threatened to keep Canada, the third member of NAFTA, out of any new trade agreement.

That fear has now been quieted, and Trump can trumpet his new proof that hard rhetoric does sometimes lead to new agreements. This measure could move some production back to the USA from Mexico and should lift Mexican wages, a White House official said.

To break up the current three-country trade agreement, Trump would need approval from Congress, something he is unlikely to get.

The deal would require 75 per cent of cars to be made in the NAFTA region, up from the current level of 62.5 per cent, a U.S. trade official said.

The Canadian foreign minister, Chrystia Freeland, cutting short a trip to Europe, was due in Washington on Tuesdayto start talks with United States trade negotiators, as pressure mounts on Ottawa to agree to join the agreement.

The Trump administration will now work in partnership with Mexico to bring Canada to the table for a new and potentially separate deal. "Canada's signature is required", spokesman Adam Austen said in an email.

He announced the progress from the Oval Office, with Mexican president Pena Nieto joining in on speakerphone.

Freeland will travel to Washington on Tuesday to continue negotiations.

Peña Nieto stressed in the phone call his hopes that it would be "an agreement the way we proposed it from the initiation of this renegotiating process, a tripartite"-an understanding confirmed by Canadian Prime Minister Justin Trudeau's office on Monday". Canada imposed tariffs on $12.5 billion of United States goods, including steel, toffee, maple syrup, coffee beans and strawberry jam. "So the president, as he's indicated, is fully prepared to go ahead with or without Canada".

"What we will do is ideally Canada will be in and we'll be able to notify that".

"I think people must take him seriously".

They'll have to use more local steel and aluminum. "But if not, they will then have to be treated as a real outsider", Ross told Fox Business Network.

The NAFTA renegotiations had dragged on for a year before the tentative agreement with Mexico was announced Monday.

One of the most fundamental parts of Trump's campaign for president was his promise to change America's deeply flawed trade arrangements. The pact also included intellectual property protections and labor rights rules.

Trump called it "one of the largest trade deals ever made". Those changes are meant to encourage more auto production in the United States.

Canada - which Trump had previously threatened with possible tariffs on cars coming to the United States - was notably absent from the agreement. The big sticking points? Trump flipped states like Michigan, Pennsylvania, and OH from Democrat to Republican in 2016 by promising economic prosperity in part by improving trade deals. The sides also have reached agreement on the portion of cars made at "high wage" factories that can receive duty-free treatment, according to reports. The U.S. had originally pushed for 85 per cent. "We're glad to see Mr. Trump step back from the suicide of Nafta withdrawal, but on the public evidence so far his new deal is worse".

In that meeting, Trudeau described the U.S. actions to raise tariffs on steel and aluminium on national security grounds as "insulting".

Ashworth expects Canada will be less accepting of US demands for sweeping reforms to its dairy market, given the political sensitivity of the issue ahead of the federal election due in October 2019. "Canada will probably have to sign on to the rest, or risk much worse arrangements with the USA outside of a trade agreement", he went on. "These lawmakers are just fine with this!" If they don't move forward, the deal will continue between the us and Mexico.

Kudrle believes the cost of goods will rise.

After mid-level trade talks in Washington last week ended with no agreement, a person familiar with the discussions said that Chinese officials had raised the prospect of suspending talks until after United States congressional elections in November. That letter could stipulate that Canada may enter the trade deal in the future. Now, the US could use its new tariffs on lumber as a negotiating tool to provide leverage in that dispute.

  • Zachary Reyes