U.S. officials met Mexican counterparts in Washington [on Friday] to resolve disagreements between the two countries on Nafta. The Trump administration has sought to portray Canada as dragging its feet in talks, part of what observers say is an effort to put pressure on Ottawa to make trade concessions.
While he praised Mexico’s president-elect, Andrés Manuel López Obrador, in Friday’s tweet, Mr. Trump went on to criticize Canada, saying its “Tariffs and Trade Barriers are far too high” and “Will tax cars if we can’t make a deal!”
Applying special tariffs to cars made in Canada would end decades of preferential treatment between the two neighbors through deals that predated Nafta. Detroit is heavily reliant on parts made nearby in Ontario, and Canadian cars trade duty free under Nafta if they meet certain rules that the U.S. wants to toughen.
Mr. Trump had most frequently threatened to apply tariffs to European or German cars, but last month he announced a trade truce with the European Union, part of an effort to negotiate a deal that lowers trade barriers between the U.S. and Europe.
Any effort to dislodge Canada from a final Nafta deal or impose special tariffs on Canadian cars would see opposition from the American auto industry, consumers and many U.S. lawmakers.
Most Likely Outcome
Given the widespread opposition by US Senators and the auto industry itself the most likely outcome is that Canada will offer Trump some meaningless concession after which Trump will brag about how great a job he is doing.
This is precisely what happened as he backed off his threat to put tariffs on German cars.
Mike "Mish" Shedlock