WASHINGTON • US President Donald Trump said yesterday there was no need to include Canada in a new Nafta deal and warned Congress not to interfere with the negotiations.
"There is no political necessity to keep Canada in the new NAFTA deal. If we don't make a fair deal for the US after decades of abuse, Canada will be out," Mr Trump said on Twitter.
He added: "Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off."
High-stakes trade negotiations between the White House and Canadian leaders unravelled on Friday, a major setback in Mr Trump's effort to redraw the North American Free Trade Agreement.
An impasse over prices for dairy products was further inflamed by private comments from Mr Trump suggesting that he would refuse to offer Canada any concessions, placing in legal limbo his administration's plans of reaching a new trade agreement with the US' neighbours.
After it became clear a deal was no longer in reach, Canadian Foreign Minister Chrystia Freeland said that her government would not sign onto an agreement unless it was good for Canadians.
NO DEAL, NO PROBLEM
If we don't make a deal on Canada, that's fine.
US PRESIDENT DONALD TRUMP
"My job is to ensure this agreement works for Canadian workers, Canadian families and Canadian businesses."
The trade talks are to resume on Wednesday, with US and Canadian negotiators saying they would still seek consensus. But Mr Trump seemed willing to leave Canada out of a final deal to rework the trade pact, and replace the three-nation Nafta with a bilateral trade agreement with Mexico.
"If we don't make a deal on Canada, that's fine," he said on Friday.
Mr Trump took a step in that direction later on Friday, formally notifying Congress he would enter into a trade agreement with Mexico.
He stipulated in a letter that Canada could be added "if it is willing".
But it is unclear whether a three-nation trade pact can be replaced under congressional rules with a two-nation agreement, and Mr Trump needs Congress to sign off on any changes to Nafta.
It is also unclear how the Mexican government will respond to Mr Trump's bid to cut Canada out of the free trade agreement.
"The notification sent by the US represents a step forward in the formalisation of the understanding reached between Mexico and the US in relation to Nafta," Mexican Secretary of Economy Ildefonso Guajardo said in a statement.
"Mexico will participate in the negotiation of trilateral issues, while continuing to promote an agreement to which Canada is a party."
Reworking Nafta is one of Mr Trump's primary economic and foreign policy goals. He reached an agreement with Mexican leaders on Monday on a smaller trade deal that he said could replace Nafta, but a number of Republican lawmakers have made clear they will support changes only if Canada is involved.
US business groups made clear that they would oppose any deal that did not include Canada.
"Anything other than a trilateral agreement won't win Congressional approval and would lose business support," the US Chamber of Commerce said in a statement.
Mr Trump is expected to try to ratchet up economic pressure on Canada in the coming days to force Canadian Prime Minister Justin Trudeau to capitulate, a person briefed on the strategy said.
WASHINGTON POST, REUTERS, BLOOMBERG