Trump Calls Trudeau `Great Friend’ as Nafta Tension Remain High

(Bloomberg)

 President Donald Trump and Canadian Prime Minister Justin Trudeau put up a front of accommodation and cooperation at the White House that belies the alarms being raised by industry and farm groups over changes to Nafta being pushed by the U.S.

Trump called Trudeau “a great friend of mine,” as they met in the Oval Office on Wednesday, and the Canadian leader reciprocated the sentiment, calling the two countries “incredibly close.”

But on the North American Free Trade Agreement, Trump showed no signs of retreat. Asked if Nafta is dead, Trump said, “We’ll see what happens.”

“It’s possible we won’t be able to make a deal and it’s possible we will,” he added.

The two leaders met as negotiators from the U.S., Canada and Mexico were convening in a Washington suburb for the fourth round of talks on reworking the North American Free Trade Agreement.

The negotiations are being held at the demand of Trump, who this week repeated his threat to pull the U.S. out of the 23-year-old accord. The U.S. president has called the agreement a “disaster” that’s cost U.S. jobs.

Trump’s hardline positions in the negotiations are drawing increasing resistance in the U.S., leaving the administration isolated at the negotiating table.

Opposition

U.S. Chamber of Commerce CEO Thomas Donohue, speaking in Mexico City on Tuesday, pledged to fight “like hell” to defend Nafta if Trump tries to pull out. The American Farm Bureau Federation is joining an umbrella group, Farmers for Free Trade, to defend the accord, which has been a boon to the agriculture industry. Representatives of the auto industry warned some of the U.S. demands could raise prices for vehicles.

Trump and Trudeau skipped the usual joint news conference after their meetings. Trump is heading to an event in Pennsylvania while the Canadian prime minister scheduled his own news conference.

One major point of contention is a move by the Trump administration to substantially increase the proportion of U.S. content required for goods assembled on the continent. That would particularly hit the auto industry, which has warned that doing so risks disrupting the auto industry’s vast supply chain and raising costs.

“There’s been huge investments in Canada, the U.S. and Mexico, that are long-term assets,” said Don Walker, chief executive officer of Magna International Inc. a Canada-based parts maker with more than 25,000 employees in the U.S. “To try and change that would be extremely expensive for the industry.”

The Chamber and the trade group for Mexico’s auto industry already have come out against an anticipated proposal to raise U.S.-specific content. The National Automobile Dealers Association said it was concerned about any changes that would make cars costlier.

During his presidential campaign and early in his term, Trump fixated on the auto industry and carmakers investing in Mexico, criticizing companies including Ford Motor Co., General Motors Co. and Toyota Motor Corp.

The current round of talks also will include discussions on financial services, labor rules, agriculture, digital trade, investment and energy, among other issues, according to the agenda. The talks are scheduled to conclude Oct. 16.