By Glenn Fleishman
September 7, 2018

President Donald Trump said Friday he could be the “ruination” of Canada if he imposed tariffs on automobile imports. “If I tax cars coming in from Canada, it would be devastating,” he said, according to a pool reporter accompanying Trump en route to North Dakota for a Republican fundraiser.

Trump said that he’d prefer not to impose tariffs in imported Canadian-made cars. However, he accuses Canada of taking advantage of America for “decades.” “We cannot continue to get ripped off like we’ve been ripped off before,” he said.

Trump’s rhetoric is aimed at forcing Canada to accept new terms in a re-negotiated North American Free Trade Agreement (NAFTA), after the Trump administration extracted concessions from Mexico, the third country in the arrangement. The changes include an increase in the percentage of a car’s value made in North America (75% up from 62.5%) to bypass import tariffs, slightly more local parts and refined metals, and nearly half of the car has to made by workers earning $16 an hour or more.

Among elements the Trump administration wanted changed is an automatic end to NAFTA every five years unless terms are renegotiated—a so-called “sunset” clause. Mexico agreed to changes that would put rules in place for 16 years, at which point renegotiations would be required and every six years thereafter.

Canada exports CDN$71 billion to the U.S. in cars and car parts, and economists expect a noticeable hit on jobs, with a loss of over 160,000 forecast, according to an estimate by TD Bank, representing a loss of just under 1% of all jobs in Canada. Losses would center in Ontario. Ontario recently elected Doug Ford, a politician who employed Trump-like campaign and leadership tactics, as its premier.

Aluminum and steel tariffs imposed on Mexico and Canada, among other nations, also remain a contentious issue.

The outgoing administration of Enrique Peña Nieto has to sign the revised deal before the incoming President Andrés Manuel López Obrador takes office on Dec. 1. Mexico has signaled it might sign the NAFTA revision without Canada’s participation, but Republicans in the U.S. Congress have said that without Canada on board, they are unlikely to allow a Mexico-only agreement to proceed.

The president, not one to play his cards close to his vest, said that threats of car tariffs cause negotiators for other countries to capitulate to his terms. “We’ll do it! We’ll do it! We’ll agree! We’ll agree!” he said, imitating trade representatives.

Canada’s foreign minister, leading NAFTA negotiations for the country, said today that good progress has been made towards hammering out Canada’s signing the revised agreement, according to Reuters.

A Canadian dairy quota system designed to protect production within the country remains a sticking point, as well as the Canadian content law, which specifies a percentage of broadcast media had contributions from Canadians.

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