In Search for Leverage, Trump May Be Undercutting His Own Trade Deals
“This will supersede USMCA,” the president wrote.
It is not clear that the president, who has repeatedly threatened auto tariffs on trading partners, would follow through with his threat. If he does, Canada and Mexico could reasonably argue that all of the agreements reached in the U.S.M.C.A. are void, resulting in the breakup of a trade pact, which is a critical agreement for businesses across North America.
“Because he is so unpredictable, you are not sure he’ll stick to anything,” said Maryscott Greenwood, chief executive of the Canadian American Business Council.
Last week, the International Monetary Fund cited global trade uncertainty, including Mr. Trump’s trade wars, as it slashed its projections for global growth. And in a survey by the Business Roundtable last September, nearly two-thirds of responding chief executives said recent tariffs and trade policy uncertainty would have a negative effect on investment decisions over the next six months.
Jesús Seade Kuri, the under secretary for North America at the Mexican foreign ministry, was in Washington this month to meet with legislators and lobby for passage of the Nafta replacement. He told reporters at a news conference that Mexico did not intend to mix discussions of trade with migration and avoided comment on the auto tariff threat.
But in an interview with a Mexican radio station this month, Mr. Seade laughed off the threat of auto tariffs. “That is being talked about,” he said, chuckling. “The art of the threat.”
That threat also hangs over Europe, South Korea and Japan, all major sources of imported automobiles for American consumers. The potential for American car tariffs has brought foreign officials to the negotiating table, with South Korea signing an updated trade deal last year, and Europe and Japan just now beginning negotiations. But those talks may be aimed more at receiving temporary protection from Mr. Trump’s auto tariffs than breaking new trade ground.
The president is required to decide whether to impose auto tariffs by May 18, but he has the option to exclude countries if they are currently in negotiations with the United States. For some foreign officials, the prudent choice has been to enter into limited negotiations, while hoping that will forestall any levies.