Trump May Demolish Another Trade Deal He Negotiated: USMCA

The Trump administration is signaling that it could withdraw entirely and renegotiate large parts of an existing trade accord with the Canada and Mexico next year, underscoring its volatile approach even among trusted trade partners.

In an interview with Politico, U.S. Trade Ambassador Jamieson Greer floated the possibility of the U.S. exiting the U.S.-Canada-Mexico trade agreement that Trump negotiated in his first term. The three countries are set to enter fresh talks in July to update the agreement, if necessary.

Trump, though, might take a wrecking ball to the entire trade deal in pursuit of something he perceives as fairer.

"The president's view is he only wants deals that are a good deal," Greer said. "The reason why we built a review period into USMCA was in case we needed to revise it, review it or exit it."

Greer added that the Trump administration might simply split the agreement in two and negotiate with Mexico and Canada separately.

Trump blew up trade talks with Canada in October over a Canadian TV ad that borrowed from President Ronald Reagan to criticize his signature tariffs. Those discussions have been paused ever since, and Canadian Prime Minister Mark Carney has expressed no rush on his end to revive the talks.

"Our relationship with the Canadian economy is totally different than our relationship with the Mexican economy," Greer told Politico. "I mean, the labor situation is different. The stuff that's being made is different. The export and import profile is different. It actually doesn't make a ton of economic sense why we would marry those three together."

The USMCA represents the biggest trade achievement for Trump in his first term. In 2020, it replaced the North American Free Trade Agreement that he relentlessly attacked first as a 2016 presidential candidate and later on as president.

It enabled $1.8 trillion in cross-border, tariff-free trade from the U.S. to Mexico and Canada in 2022, according to government data. Much of U.S. exports to both countries consisted of services exports including professional and financial services.

The U.S. has kept 50% tariffs on Canadian steel and aluminum in tandem with a 25% tariff on Canadian imports. By comparison, Mexico has largely been spared from Trump's tariffs, with the bulk of its goods still entering the U.S. duty-free since they comply with U.S. origin rules under the USMCA agreement.

Source: Yahoo Finance