“We are not going to arrive at mutual respect, which is where we solve common problems” Justin Trudeau declared in New York Wednesday, “if we cocoon ourselves in an ideological, social or intellectual bubble.”
The Prime Minister decried trends toward “polarization and aggressive nationalism.” He deplored “tribal mindsets.” He could have equated Donald Trump with each. But he passed on the personal put-down, not naming him.
It’s a good thing because now that the NAFTA renegotiation process is on life support, he is at Donald Trump’s mercy, as is Canada’s trading relationship. He has no option now other than to curry favour with the maverick President in the hope of getting him to set aside some of his tribal and polarizing tendencies.
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Given the all-but-doomed negotiations, Mr. Trump is now at liberty to abrogate the treaty. It’s what he threatened to do if they were unsuccessful. He is now free to impose his threatened steel and aluminum tariffs on Canada. He had given Mr. Trudeau an exemption pending successful negotiations.
Canada wants stability on the trade front. The opposite is in the offing. Even if Mr. Trump doesn’t exercise the draconian options, there is still the prospect of trade negotiations wandering into next year with anybody’s guess as to the outcome.
It was personal diplomacy that saved the trade accord a year ago. Mr. Trump was on the verge of abandoning it when Mr. Trudeau and Mexican President Enrique Pena Nieto talked Mr. Trump out of doing so.
After talking to Mr. Trump this week, the Prime Minister sounded optimistic that an agreement was near only to have U.S. Trade Representative Bob Lighthizer emerge Thursday to declare that ”the NAFTA countries are nowhere close to a deal… There are gaping differences.”
Despite being a polar opposite in so many policy areas, Mr. Trudeau has maintained good personal relations with Mr. Trump who calls him “a good guy.” The President also called the Chinese leader a great guy while bashing him on the trade front. The same goes for French leader Emmanuel Macron.
Still, given that the volatile President operates from a low information base, access and personal rapport are critical. In March, Mr. Trudeau caught the President by surprise, explaining that the United States did not in fact run a trade deficit with Canada. Mr. Trump admitted after the meeting that he didn’t know the statistics, even though deficits are behind his trade reform drive.
Mr. Trudeau has spoken to him twice this week. He is hosting the G7 summit in June in Quebec and the run-up will provide him ample opportunity to explain how a trade war will damage the interests of both countries.
A first priority will be to get a continued exemption on steel and aluminum tariffs which could go into effect on June 1. Ottawa has threatened to retaliate with protective tariffs of its own should Mr. Trump exercise that option.
Mr. Trump’s major NAFTA beef is with Mexico where he has a large trade deficit. He wants restricted immigration flows from Mexico tied to a revised NAFTA. That wish seriously complicates negotiations. So does the Mexico election scheduled for July 1.
Mr. Trump has abrogated three international agreements: the Trans-Pacific Partnership, the Paris climate accord and the Iran nuclear agreement. Moving ahead with a fourth by tearing up NAFTA would only be in character.
American negotiators have been driving a hard bargain in talks to the point where Canadian officials wonder whether they even want a renegotiated accord. If they do, it seems it’s only on their terms. Failure is an option for them in that Mr. Trump’s original wish was to scrap the deal anyway.
Chances are extremely remote that an accord could be agreed to and approved by the Congress before the fall midterm elections. The elections could return a Democratic majority in the House or in the Senate or both, meaning any trade plans of the President would then be subject to the will of the party opposing him.
Not entirely surprising would be a move by Mr. Trump to abandon NAFTA with a call for new negotiations for separate bilateral trade deals with Canada and Mexico.
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It’s one among many unsavoury prospects that Justin Trudeau, who can only dream of the American election having returned a different result, now must confront.