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Kudlow says Trump will force Canada’s hand on trade, here’s how

28 Août 2018

There's a few reasons why they might.

A source in South Korea's auto industry said many automakers would find it hard to meet the rule on workers' wages, which are much cheaper in Mexico.

Trump then dangled the possibility of imposing harsh auto tariffs to punish Canada. Tell that to the Big Three, or Honda and Toyota in Ontario, or to parts suppliers like Linamar and Magna.

News of the U.S. -Mexico tentative deal has raised concerns the trade ship has left port, with Canada still at the dock.

According to the US-based Economic Policy Institute, about 700,000 jobs have been lost nationwide due to growing trade deficits with Mexico caused by NAFTA.

Though the United States and Canada have traditionally enjoyed good trading relations, some 75 percent of Canada's exports are reportedly bound for the U.S. with only 15 percent of American exports destined for Canada. Starbucks and Costco now have more than 500 stores in Mexico. It later morphed into the US-Mexico deal's requirement of 40 to 45 per cent of a vehicle's value to be made in high wage areas paying at least $16 an hour, requiring significant automotive production in the United States.

Moore and others say the US-Mexico agreement jumpstarts prospects for a negotiated deal with the Europeans and gives an upper hand in negotiations with China.

Canadian Foreign Minister Chrystia Freeland is expected to travel to Washington for talks on Tuesday. But Canadian officials said US negotiators are still working toward a three-way agreement. "I will terminate the existing deal", Trump replied.

And Mexican President-elect Andres Manuel Lopez Obrador called for a three-way trade deal, saying "it's important that Canada also be included". Under it, to sign something before December 1, when Mexico's president-elect is due to take office, U.S. Trade Representative Robert Lighthizer said he hopes to give notice of a deal by the end of this week.

But Trump spoke of a possible separate agreement with Canada, or none at all.

"Canada shouldn't have a problem signing on to this", Ashworth said.

Others weren't so sure. But suddenly the heat seems to be on to have Canada sign a new NAFTA deal by the end of the week.

Noting the "massive amount of movement of goods between the three countries and the integration of operations", Jay Timmons, president of that National Association of Manufacturers, said "it is imperative that a trilateral agreement be inked".

"There are still issues with Canada but I think they could be resolved very quickly", a senior trade official told Reuters in an interview. Specifically, Trump called to congratulate Peña Nieto and himself on replacing NAFTA with what Trump called the United States-Mexico Trade Agreement.

That doesn't leave Canada off the hook. "I hope it has been worth it, a maneuver that, to put it politely, does not do us honor".

Donald Trump has said that he could go ahead without Ottawa in the new agreement.

That concession from USA negotiators contributed to the sense of relief on the Mexican side.

Another issue is anti-dumping panels allowed under the current NAFTA, known as Chapter 19 panels. They want the predictability of export markets over aid.

Estes, he said, "has done nothing to protect farmers and has instead acted like a highly paid cheerleader for the the president".

Speaking from the White House Monday morning, President Trump announced a reboot of NAFTA after weeks of negotiations with Mexico. Neither President Trump nor Peña Nieto mentioned the sunset clause during their announcement. Trudeau looks forward to talks this week "with a view to a successful conclusion of negotiations". But the stock market reacted very positively to the news of the deal.

Kudlow says Trump will force Canada’s hand on trade, here’s how