Trump uses levies as leverage in Nafta talks

The latest round of talks to revamp the North American Free Trade Agreement ended without a joint statement from the United States, Canada and Mexico.
US President Donald Trump demanded that Mexico do more to prevent drugs from entering the United States as one of the conditions for lifting upcoming steel and aluminium tariffs.
US President Donald Trump demanded that Mexico do more to prevent drugs from entering the United States as one of the conditions for lifting upcoming steel and aluminium tariffs.PHOTO: AFP

WASHINGTON • US President Donald Trump has further expanded his personal trade war, telling Canada and Mexico that he would consider lifting possible tariffs on steel and aluminium only if they concede to White House demands for renegotiating the North American Free Trade Agreement (Nafta).

Like almost every broadside over a trade war so far, his latest message was sent in a Twitter post yesterday with little explanation.

"We have large trade deficits with Mexico and Canada. Nafta, which is under renegotiation right now, has been a bad deal for USA. Massive relocation of companies and jobs. Tariffs on steel and aluminium will only come off if new and fair Nafta agreement is signed," Mr Trump tweeted.

He also demanded that Mexico do more to prevent drugs from entering the United States as one of the conditions for lifting upcoming steel and aluminium tariffs announced last week.

Canada is the top exporter to the United States of both steel and aluminium. Canada is also the biggest importer of US steel and aluminium.

The three Nafta partners - Canada, Mexico and the US - have been locked in talks aimed at possibly revamping the trade deal, but no clear framework has so far emerged.

The latest round of negotiations was expected to wrap up yesterday in Mexico City. Mr Kevin Brady, the Republican chairman of the House Ways and Means Committee, said the tariff issue would be "front and centre" in the Nafta haggling.

Mr Trump last Thursday surprised much of Washington - and his own staff - by announcing that he would impose a 25 per cent tariff on steel and a 10 per cent tariff on aluminium. A formal announcement is expected this week or next.

Mr Trump had originally said he wanted tariffs on steel and aluminium as a way to address what many view is a global oversupply of Chinese production, but China does not export much steel and aluminium to the US, making it hard to directly limit its production unilaterally.

The plan has sparked an outcry among American allies such as Canada, the European Union, Mexico and Australia, as well as China.

French President Emmanuel Macron said yesterday that the EU must "react quickly" to US plans for tariffs, which he said clearly breached global trade rules. The European Commission has said it is drawing up retaliatory measures against leading US brands such as Levi's jeans and Harley Davidson motorcycles.

The German government warned yesterday that a transatlantic trade war would harm both Europe and the US, urging Washington not to take a "wrong path" after a weekend of aggressive rhetoric.

WASHINGTON POST, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on March 06, 2018, with the headline 'Trump uses levies as leverage in Nafta talks'. Print Edition | Subscribe