Trump's trade war hangs over neighbours at Nafta summit
US President Donald Trump said he won't lower tariffs on steel and aluminium from Mexico and Canada unless the two countries agree to a revamped North American Free Trade Agreement (Nafta) he regards as fair to the US.
"Nafta, which is under renegotiation right now, has been a bad deal for USA. Massive relocation of companies & jobs," he tweeted yesterday. "Tariffs on Steel and Aluminium will only come off if new & fair Nafta agreement is signed."
Officials from the United States, Canada and Mexico met yesterday for the latest round of Nafta talks under the shadow of US President Donald Trump's proposed steep tariffs.
Trump is expected to finalise tariffs - 25pc on steel and 10pc on aluminium - later in the week, posing a tough challenge for US Trade Representative Robert Lighthizer, Canada's Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo.
But ahead of the talks, Trump appeared to tie possible exemptions for the United States' two neighbours to a "new" Nafta deal as well as other steps. President Trump also tweeted that US farmers were badly served by Nafta.
"Also, Canada must treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the US. They have not done what needs to be done.
Mexican and Canadian ministers are likely to press Mr Trump's trade envoy for more details on how their countries could be excluded from the blanket tariffs.
"I expect it to be front and centre" at the meeting, said Kevin Brady, the Republican chairman of the US House of Representatives Ways and Means Committee, which oversees US trade policy.
Officials have so far been evasive when asked how the three nations can continue trying to update Nafta when the US president is about to take a protectionist measure.
Mr Brady led a delegation of US politicians to Mexico City to press officials on the need to conclude the talks, which have unnerved financial markets worried about the possibility that the North American supply chain could be disrupted.
Speaking on Sunday, Kevin Brady said all fairly traded steel should be excluded from the tariffs. A representative for the White House did not immediately respond to a request for comment on President Trump's statement.
The Nafta talks are going slowly and the Mexico City round - the seventh of eight planned sets of negotiations - produced little of substance.
Eight days of talks in Mexico's capital failed to make headway on new rules governing the content of products made in North America, which has been one of the most contentious issues in the talks.
The US negotiator charged with overseeing the so-called rules of origin unexpectedly returned to Washington for consultations early on and did not return.
Talks on the matter will be rescheduled before the expected next proper Nafta round in Washington in early April.
Still, Brady said he was impressed with the progress made during the week, emphasising it was important to finish negotiating a modern, pro-growth agreement that would boost manufacturing and jobs.
US Representative Roger Marshall, a Republican who travelled with Brady to Mexico, said meetings during the week had closed chapters related to chemicals, communications and anti-corruption efforts. "I am very optimistic," Mr Marshall told reporters after briefings from US trade officials.
Canada's chief negotiator, Steve Verheul, said: "For the week we do have successes we can point (to), but we still have got a bit more to do."
Dave Solverson, a former president of the Canadian Cattlemen's Association, said the Nafta region could not afford a trade war. (Reuters, additional reporting Bloomberg)