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American Shipper

Trump lauds NAFTA ‘replacement’

The president says tariffs on cars from Canada would “be even better” than a renegotiated agreement.

   President Donald Trump on Thursday night continued his emphatic praise of the U.S.-Mexico Trade Agreement announced on Monday as a replacement for the North American Free Trade Agreement (NAFTA).
   Although not technically a new trade deal, the preliminary agreement between the United States and Mexico did represent progress in ongoing NAFTA talks in that it ended a negotiating stalemate and allowed Canada to return to the negotiating table.
   Both the Trump administration and Mexican trade officials vowed to move forward without Canada if a new NAFTA deal is not completed by the end of the day Friday, but analysts and federal lawmakers have pointed out that it may not be possible to simply replace the trilateral NAFTA with a bilateral deal with Mexico.
   The announcement appeared to be aimed at putting additional pressure on Canada to make concessions as Canadian negotiators headed to Washington, D.C., to rejoin talks on Tuesday.
   During a rally in Evansville, Ind., Thursday night, Trump threatened to increase U.S. import tariffs on cars made in Canada if Canada doesn’t drop its own tariffs and non-tariff barriers to U.S. exports, and even suggested this would be a more beneficial outcome for the United States than a renegotiated NAFTA.
   “Just this week we made another truly historic announcement,” he said. “We are replacing NAFTA with a beautiful brand new U.S.-Mexico trade deal. … And we love Canada, right? But they have to get rid of those barriers and they have to get rid of those big tariffs.
   “So we made a great deal with Mexico. And as you know, Canada didn’t want to do what we have to have done. And after the deal was made with Mexico, Canada came along and theyre negotiating right now at the White House, at our territory.
   “And it could happen. We’ll see what happens. And if it doesnt happen well put tariffs on the cars coming in from Canada and thatll be even better.”
   Trump has been critical of U.S. automakers that have moved production facilities outside of the country, and although an increase in tariffs might convince some to move back, it would also increase prices for consumers, which could in turn have a negative effect on demand for those same cars and trucks. According to an analysis from CBS News, roughly 10 percent of cars sold in the United State are produced in Canada.
   The presidents latest comments on the NAFTA negotiations came just hours after the publishing of several reports stemming from an exclusive interview with the Bloomberg news service.
   During the interview, Trump said he had rejected an offer from the European Union to drop its tariffs on U.S. automobiles to zero as insufficient and reiterated a prior threat to withdraw the United States from the World Trade Organization.
   “It’s not good enough,” the president said of the EU’s proposal. “Their consumer habits are to buy their cars, not to buy our cars,” he said, adding that the European Union “is almost as bad as China, just smaller.”
   Just last month, Trump and European Commission President Jean-Claude Juncker announced a handshake agreement that included, among other things, a pledge from the EU to import more soybeans and liquefied natural gas from the United States. It’s possible that the U.S., which reportedly insisted on leaving automobiles out of the EU deal, would ask for a similar commitment on U.S.-made vehicles.
   The Commerce Department in May began an investigation into the national security impacts of global automobile imports that could result in tariffs similar to those currently being imposed on steel and aluminum. Earlier this month, several major automobile manufacturing and parts associations with members both in the U.S. and abroad, banded together to form a coalition with the sole purpose of opposing such tariffs, warning that they pose a “significant threat” to the U.S. economy.
   With regard to the WTO, Trump renewed his criticism of the organization’s treatment of the United States, claiming that the U.S. “rarely won a lawsuit except for last year.”
   “In the last year, we’re starting to win a lot,” he said. “You know why? Because they know if we don’t, I’m out of there.”
   Citing data from the WTO, Simon Lester, a trade analyst at the Cato Institute, told Bloomberg that generally speaking, the U.S. actually fares slightly better than the average country in terms of its win-loss rate in WTO disputes, winning roughly 91 percent of cases it filed and losing about 86 percent of the cases other countries have filed against it.
   WTO members have called for widespread reforms to the organization, most notably in how it handles government subsidies to certain industries and intellectual property concerns, but have been consistent in saying that these reforms should not come at the expense of the current system of resolving disagreements in international trade.
   “It is a common duty of Europe and China, America and Russia, not to destroy this order, but to improve it,” Donald Tusk, president of the European Council, said of the WTO at a July press conference in Beijing. “Not to start trade wars, which turned into hot conflicts so often in our history, but to bravely and responsibly reform the rules-based international order.”
   These reforms may not be enough for Trump, however, who has long accused the organization of being biased against the United States.
   “If they don’t shape up, I would withdraw from the WTO,” Trump told Bloomberg, a move that analysts say would serve as a major blow to the international trading system and potentially the global economy.

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