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Trump’s New Trade Deal With Mexico Isn’t Really a Trade Deal

The president doesn’t appear to have any clue what NAFTA negotiations entail

WASHINGTON, DC - AUGUST 27:  U.S. President Donald Trump speaks on the telephone via speakerphone with Mexican President Enrique Pena Nieto in the Oval Office of the White House on August 27, 2018 in Washington, DC. Trump announced that the United States and Mexico have reached a preliminary agreement on trade.  (Photo by Win McNamee/Getty Images)

President Trump

Win McNamee/Getty Images

American farmers and manufacturers have been growing impatient for President Trump’s harebrained tariff scheme to pay dividends. The taxes the administration imposed earlier this year on steel and aluminum imports have wreaked havoc on a number of industries, leading to factory closures, job losses and the need for some companies, most notably Harley-Davidson, to shift some of their production overseas. Trump has urged those affected to remain patient, teasing on Twitter that new trade deals are imminent. On Monday morning, the president tweeted about “a big deal looking good” with Mexico. He announced that “deal” a few hours later in a bizarre press event in the Oval Office.

What Trump is calling the “United States-Mexico Trade Agreement” is actually nothing more than an informal, preliminary agreement on rules mostly centered around auto manufacturing. The terms will ultimately represent a portion of a potential new NAFTA deal, the negotiations for which are still ongoing and also include Canada. But on Monday, Trump said that this new “agreement” could actually replace NAFTA, which he threatened to “terminate.” As the name implies, Canada could be excluded from a deal unless they fall in line. “We’ll see whether we’ll decide to put up Canada,” Trump said, adding that he may “just make a separate deal” with America’s neighbor to the north.

As much as he may want to, however, Trump can’t simply pivot to bilateral negotiations because he’s been frustrated with Canadian Prime Minister Justin Trudeau. On Sunday, Mexican President Enrique Peña Nieto spoke on the phone with Trudeau to reaffirm their commitment to a trilateral deal. On Monday, Peña Nieto suggested on Twitter that he doesn’t intend to sign a bilateral agreement with the United States.

If Peña Nieto were to somehow change course and agree to a bilateral deal with the U.S., he would have to sign it before December 1st, when he will be replaced in office by Andres Manuel Lopez Obrador, his newly elected successor. But a bilateral deal wouldn’t even be possible without approval from Congress, which so far has only signed off on negotiations that include all three nations. Congress would need 90 days of notice to approve the necessary changes, meaning that, unless the Trump administration submits a new plan to Congress this week, Peña Nieto will be out of office by the time 90 days elapse and Congress is able approve a bilateral deal.

U.S. Trade Representative Robert E. Lighthizer told reporters on Monday that Congress will indeed be notified Friday of an agreement between the United States and Mexico, but also acknowledged that they will do all they can to include Canada in the deal, and that it could take weeks to reach an agreement. Notifying Congress of a plan to change NAFTA so quickly could simply be a negotiating tactic to force Canada to accept Trump’s demands immediately, but it’s hard to imagine this will be effective. “We will only sign a new NAFTA that is good for Canada and good for the middle class,” a spokesman for Canadian Foreign Minister Chrystia Freeland said, according to the Washington Post. “Canada’s signature is required.”

Holding a press event to announce these preliminary changes was not only unorthodox, it has created an undue amount of confusion regarding the status of NAFTA negotiations and the president’s intentions, which don’t seem to be derived from any sort of rational understanding of the situation. To underscore the absurdity of this attempt to convince the public he is on the verge of solving the trade crisis — Trump called the informal agreement with Mexico “maybe the largest trade deal ever made” — the president spoke with Peña Nieto on speakerphone as reporters looked on. There were a few false starts.

Trump ultimately congratulated the Mexican president on the agreement, which did not address the steel and aluminum tariffs that have been crippling several sectors of American agriculture and manufacturing industries. Peña Nieto was gracious, offering the teetotaling Trump a “toast, with tequila, of course.”

“A hug from you would be very nice,” Trump replied.

Canadian Foreign Minister Freeland is expected to travel to Washington on Wednesday to resume negotiations.

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