Written in partnership with CNN:
Donald Trump is often far from coherent, in his statements or his actions.
Even on Monday, he was showing his temperament and unpredictability, sulking over the tributes to John McCain, refusing to say the Senator’s name, but then relenting and allowing the White House flag to be flown again at half-mast.
But at times there is a method to the turmoil. Trump rambled through his press appearance yesterday, announcing the “incredible” trade deal with Mexico and (at least in his mind) wiping out NAFTA and replacing it with the US-Mexico Trade Agreement. But he and his staff were implementing — crudely, bluntly, but effectively — the tactics we have seen them use time and time again: Divide and rule.
By winning over the Mexicans, rule over the Canadians. By sweeping away other news and wildly exaggerating the NAFTA revisions, rule at home by proclaiming Tariffs and Trade Agreements before November’s Congressional elections.
But will the Administration succeed?
Certainly the Canadians were rattled on Monday. They were shaken by Trump’s threat of a 25% auto tariff if Ottawa did not “negotiate fairly”, i.e., concede to US demands by this Friday. They were concerned by other Administration officials repeating the ultimatum, such as chief economic advisor Larry Kudlow’s “if we can’t get a good strong fair deal with Canada…the US might have to resort” to the new tariffs, on top of the 25% steel and 10% aluminum duties already imposed by Trump.
Perhaps most of all, they were unsettled that the Mexicans had gone along with the power play. Foreign Minister Luis Videgaray said he preferred a three-way deal, but “there will be a free-trade agreement with the United States regardless of whether Canada continues or not”.
That’s why Foreign Minister Chrystia Freeland — refused a meeting with US Trade Representative Robert Lighthizer last Friday — is cutting short her European trip and heading to Washington on Tuesday.
The Trump Administration will be hoping for a quick Ottawa surrender, having agreed with the Mexicans steps that could include punitive tariffs on Canadian softwood lumber and a curb on Canada’s support for its dairy industry. Yet if Prime Minister Justin Trudeau’s staff were declaring a “constructive” phone call with Trump yesterday, Freeland’s office were signalling No Capitulation: “We will only sign a new Nafta that is good for Canada and good for the middle class. Canada’s signature is required.”
And that in turn could complicate Trump’s second front: the Tariff-Trade approach that Makes America Great Again.
Protectionism for Votes
The Trump Administration has support for a quick outcome from Mexico, which wants the white smoke of success before President Enrique Peña Nieto leaves office on December 1. Given a 90-day process for Trump’s signature and US Congressional approval, that sets the Friday deadline for Canada to get on board.
But while the Canadians may well give some ground on certain issues, such as dairy support, they may not be keen to do so with a political and economic gun at their heads.
And amid the complexity of trade discussions — the US and Mexico took months to get to Monday’s announcement — Ottawa could easily spin out this process to deny Trump his pre-election victory.
Why does this matter?
Because few Americans are likely to know the details of any agreement, the Trump strategy already is to oversell the headline. Monday’s “US-Mexico Trade Agreement” was in fact a relatively small revision of NAFTA.
There were changes to the levels of inputs from NAFTA countries into the manufacture of automobiles, a requirement athat 40% to 45% of the content of vehicles made in North America come from factories where workers earn at least US$16 an hour, an understanding on intellectual property.
But just as the Administration overplayed the announcement of an Embassy in Jerusalem, and just as they told a flat-out lie about making NATO members pay money “owed” to the US, so they are gambling that style overshadows substance.
That works if Canada gives in to the script. But will Justin Trudeau, whom Administration officials consigned to a “special place in hell” after June’s G7 summit, want to accept the diktat? Will Canadians acquiesce in what could easily be seen as bullying by their neighbor to the south?
Lawrence Herman, a former Canadian diplomat, summarized coolly on Monday:
Mr. Trump can lambaste Canada and make all kinds of threats…but the fact is the NAFTA can only be revised if Canada agrees to implement the package after full review and Parliamentary consideration.
Let the showdown begin.