On Monday morning, the president made a dramatic announcement that he would soon be “terminating” the North America Free Trade Agreement and negotiating a new deal. “They used to call it NAFTA,” he said. “We’re going to call it the United States-Mexico trade agreement. We’ll get rid of the name NAFTA.”
The president’s words have to be treated with some caution. It does appear that there is some movement on NAFTA, with Mexico making provisional concessions on rules about automobile manufacturing. Still, the way Trump discussed the deal was at odds with the known facts about what his administration is negotiating. Crucially, Trump spoke as if his government were pursuing separate two-countries deals with Canada and Mexico. In fact, the actual negotiations are for three-country deals involving the existing NAFTA partners.
As The Toronto Star notes:
In announcing the deal Monday, Trump described the preliminary agreement with Mexico in a way that did not match what his administration is actually doing.
Trump inaccurately referred to the preliminary agreement with Mexico as if it were a final trade agreement of its own, separate from North American Free Trade Agreement. He called it “the United States-Mexico Trade Agreement,” and he said he was not sure if Canada would be permitted to join it. He also threatened auto tariffs on Canada, saying, “The easiest thing we can do is tariff their cars coming in.”
In fact, the U.S. and Mexico have not made a separate trade agreement to replace NAFTA, nor come to a final accord of any kind. Rather, they have made a kind of sub-deal that will now be folded into the ongoing three-country NAFTA talks as Trump’s trade officials scramble to complete a three-country deal.
Perhaps the best-case scenario is that the parties in NAFTA will just ignore Trump’s misrepresentation and continue with negotiations, treating the president as background noise.