As Donald Trump's allies in the corporate community rush for the White House exits, his dream of re-writing the North American free-trade agreement may be following them out the door.
No, it's not the NAFTA renegotiation talks themselves – which began in Washington on Wednesday – that have created a falling out between the mercurial U.S. President and the high-level business leaders who have been advising him. Rather, Mr. Trump's controversial comments regarding violence in Virginia at protests the included white supremacist groups convinced some of the President's strongest supporters in the corporate sector that they'd had enough. On Wednesday, the President's top strategic advisory panel and his manufacturing council both disbanded, amid a rash of resignations. Despite Mr. Trump's pro-U.S.-business agenda, his erratic and divisive leadership has caused some of his strongest supporters in corporate America to sever ties with this President.
On one level, this is another instance of Mr. Trump shooting his own agenda in the foot; having his key business advisers jump ship at the precise moment his team begins talks on one of his biggest economic priorities is, to say the least, remarkably bad timing. But with this deep rift between the President and his business leadership exposed, it also raises serious questions about how the President will win over this critical constituency for his more ambitious NAFTA goals. They simply won't fly without the blessing of an increasingly alienated corporate leadership.
Mr. Trump's NAFTA quest has always been a dubious proposition for U.S. business, anyway. Aside from a few aggressive industry lobbies that have their problems with elements of the trade deal (most notably for Canada, the lumber sector), the bulk of corporate America is staunchly pro-trade and has long supported NAFTA. While Mr. Trump was still threatening to tear up the deal, business leaders were talking about "modernizing" it. And while the Trump administration has continued to talk about using the NAFTA discussions to somehow address the U.S. goods trade deficit and the loss of manufacturing jobs, the business community has been warning that jeopardizing the North American trade relationship in the name of defending U.S. workers could instead put a lot of them at risk.
"Some 14 million U.S. jobs depend on trade with Canada and Mexico, and $1.3-trillion in trade crosses our borders annually. The livelihoods of many of our nation's farmers, ranchers, manufacturers, service providers and small businesses are directly or indirectly tied to NAFTA," said Thomas Donohue, president and chief executive of the U.S. Chamber of Commerce – the biggest lobby group in Washington – in a commentary published last month. "The Chamber has fought hard to ensure that negotiators do no harm, preserving market access and rules that work well."
"This whole business of renegotiating NAFTA was a campaign pledge in search of a constituency," said Scott Miller, a former corporate lobbyist who is now at the Center for Strategic and International Studies, in an interview with political-news website Politico this week. "No business community member, no enterprise, no farm group ever asked for this."
That's certainly something that Congress, which ultimately has authority over U.S. trade agreements, is keenly aware of. It's another place where the President's support is on increasingly shaky ground. Now that it no longer has the President's ear, the U.S. corporate leadership will undoubtedly turn its Washington lobbying juggernaut to making Congress well aware of its reluctance to anything that would disrupt the current NAFTA relationship.
Don't be surprised if many pro-trade Republicans in Congress – and there are lots of them – line up with their corporate allies, rather than with the President, on the NAFTA renegotiation. And Congress has considerably more sway over trade agreements than it did during the original NAFTA negotiations in the 1990s, having reined in presidential "fast-track" negotiating powers during Barack Obama's presidency.
It adds up to a watering down of Mr. Trump's NAFTA plans, if he has any hope of winning the grudging approval of both the business leaders and Congress who are losing their tolerance for his reckless shenanigans. If the U.S. trade negotiators aren't already mentally scaling back their goals to something more like a modest revision and update of the NAFTA pact, rather than the wholesale re-write that Mr. Trump promised in his election campaign, they certainly should be.
That may be for the best for all involved, said Christopher Sands, director of the Center for Canadian Studies at Johns Hopkins University.
"The current negotiation struck everybody a little bit by surprise, except perhaps for Donald Trump," he said in a discussion published on Wednesday by the Macdonald-Laurier Institute, an Ottawa think tank. "If successfully concluded, the current round of NAFTA 2.0 talks might create some modest changes to the agreement. But some of the potential ideas … may simply be beyond the reach of current negotiations – but they might be on the agenda with a future prime minister or a future president."
Perhaps a thorough re-write of NAFTA will happen, some day. But it's increasingly evident, as Mr. Trump continues to lose friends and alienate people, that he is not the president to pull it off.