Opinion: Breaking down the latest trade results from Trump
From Canada and Mexico to Europe and China, President Trump kept negotiators on the other side of the aisle, as well as the rest of the world, guessing.
Steve Dittmer, Opinion, BEEF Magazine
Dec 05, 2018
Dittmer is a longtime beef industry commentator and executive vice president of the Agribusiness Freedom Foundation
One thing about those global summit meetings: they are either mostly show and practically a bust or they are the catalyst to moving stalled initiatives forward. There seems to be no in between. Since President Trump is not much for treading water, if he is going to fly somewhere and do meetings, he intends to make things pop.
Buenos Aires for the G-20 Summit provided a sideline for the three “formerly known as NAFTA” countries to do the final signing of the USMCA. Problem is, those steel and aluminum tariffs Trump imposed -- and the retaliatory tariffs from Canada and Mexico -- were still in place leading up to the summit.
Mexico made noises about not signing the USMCA if some agreement regarding lifting tariffs, or whatever was going to replace them, was not in place. Canada hadn’t committed to sign or not to sign. One official still retaining that vaunted Canadian grit with humor, suggested Prime Minister Justin Trudeau send some fourth a minister from some obscure department with a bag over his head to sign.
That humor should not gloss over the damage that has been done to friendly U.S./Canadian relations over this renegotiation. The Canadians cannot come to grips with Trumps’ results over style, sometimes brash bulldozer approach, any more than the never-Trumpers in the U.S. seem to be able to.
Person-to-person relationships at the level of cattlemen doing actual business will overcome this over time, but the damage is there and Americans must deal with it.
Trudeau did eventually sign the deal, probably because he had little choice. The major carrot in a side letter to the deal was that signatories of the USMCA will be exempted from a number of auto and auto parts tariffs if President Trump imposes that long threatened 25% tariff on cars and parts.
But the mood was somber, not celebratory. Canada supposedly sent word ahead—no champagne. Mexico said it was hoping for an agreement on the steel and aluminum tariffs by year end. It is considered likely that the tariffs would be replaced by a quota system.
Canada, on the other hand, was hoping for court victories against the tariffs and/or holding out for a better deal, even if it takes longer. While Trump and Lighthizer see many tariffs—although not so much in the steel and aluminum case—as a short-term stick to get countries to the negotiating table, Canada’s Foreign Minister Chrystia Freeland felt they should not have been part of this renegotiation at all. Canada has filed legal complaints with the WTO and under the existing NAFTA rules.
Getting rid of those metals tariffs to get trade in agricultural commodities like pork, soybeans, etc. back on track is taking longer than many thought. That is because, I believe, Trump is not willing to just drop the steel and aluminum tariffs, believing that some form of protection to some extent is necessary to keep some semblance of a steel and aluminum industry intact. I also believe he thinks it’s necessary to his political career.
Then there’s Europe and China ...
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