Tariff tensions shadow U.S., Canada, Mexico trade pact signing

BUENOS AIRES, Argentina – President Donald Trump teamed up with the leaders of Canada and Mexico on Friday to sign a revised North American trade pact, a deal that fulfills a key political pledge by the American president but faces an uncertain future in the U.S. Congress.

The celebratory moment was dimmed by ongoing differences over Trump’s steel and aluminum tariffs, as well as plans for massive layoffs in the U.S. and Canada by General Motors.

The U.S.-Mexico-Canada Agreement is meant to replace the 24-year-old North American Free Trade Agreement, which Trump has long denigrated as a “disaster.”

Trump appeared with Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto at the Group of 20 nations summit in Buenos Aires for the formal signing ceremony. Each country’s legislature must also approve the agreement.

“This has been a battle, and battles sometimes make great friendships, so it’s really terrific,” Trump said of the combative process to overhaul the pact.

Legislative approval is the next step, but could prove to be a difficult task in the United States, especially now that Democrats – instead of Trump’s Republicans – will control the House of Representatives come January. Democrats and their allies in the labor movement are already demanding changes to the agreement.

Within hours of the signing, Senate Democratic Leader Chuck Schumer said the deal must have stronger labor and environmental protections in order to get majority support in Congress and “must prove to be a net benefit to middle-class families and working people.”

The three countries agreed to the USMCA just hours before a U.S.-imposed Sept. 30 deadline. Many trade analysts say the successor to NAFTA isn’t all that different from the original one, despite Trump’s claim that it would “transform North America back into a manufacturing powerhouse.”

Trudeau said the deal “lifts the risk of serious economic uncertainty” and said Canada worked hard for a “new, modernized agreement.” But he also used the ceremony to call on Trump to remove steel and aluminum tariffs the U.S. slapped on Canada and Mexico. Trudeau also referenced recent downsizing moves by GM in North America as a “heavy blow.”

“With hard work, good will and determination I’m confident that we will get there,” Trudeau said.

Pena Nieto, who will hand off to his successor Saturday, said he was honored to be at the signing on the final day of his administration, calling it the culmination of a long process “that allow us to overcome differences and to conciliate our visions.”

Trump is describing USMCA as a landmark trade agreement. But most companies are just relieved that it largely preserves the status quo established by NAFTA: a regional trade bloc that allows most products to travel between the United States, Canada and Mexico duty free. During the contentious negotiations that led to the USMCA, Trump repeatedly threatened to pull out altogether. Such a move would have disrupted businesses that have built complicated supply chains that straddle the borders of the three countries.

The new agreement does make some changes to the way business is done in North America. It updates the trade pact to reflect the rise of the digital economy since the original NAFTA took effect nearly a quarter century ago. It gives U.S. dairy farmers a bit more access to the protected Canadian market. The biggest changes target the auto industry. The new deal encourages auto companies to invest or expand in the United States and Canada, not low-wage Mexico, by requiring that 40 percent of cars be made where auto workers earn at least $16 an hour; otherwise, the car won’t qualify for USMCA’s duty-free treatment.

The signing came at the front end of two days of tough diplomacy for Trump. On the top of his agenda is a Saturday dinner meeting with Chinese President Xi Jingping that will determine whether they can ease escalating trade tensions. Before Trump arrived in Argentina he injected additional drama into the proceedings by canceling another high-stakes meeting, with Russian President Vladimir Putin. Also of interest was whether Trump would have an encounter with Saudi Crown Prince Mohammed bin Salman, who was attending amid global dismay over the murder of Saudi journalist Jamal Khashoggi.

Trump gathered with the leaders for a traditional group photo, but did not appear to acknowledge Putin or the crown prince as he walked by. A senior White House official later said Trump and bin Salman exchanged pleasantries during a subsequent leaders’ session. The official spoke on condition of anonymity due to the sensitive nature of the crown prince’s situation.

Trump told reporters later: “We had no discussion. We might, but we had none,” he said.

Trump also expressed optimism about a deal on trade with China, telling reporters “There’s some good signs. We’ll see what happens.” He also insisted he canceled a meeting with Putin because of Russia’s actions in Ukraine and not be because of the federal investigation into Russian interference in his election.

His chief White House spokeswoman made the same point earlier Friday.

“On the basis of what took place with respect to the ships and the sailors, that was the sole reason,” Trump said.

Trump announced via Twitter Thursday that he was canceling the planned meeting with Putin over Russia’s seizure of Ukrainian vessels. The abrupt announcement came not long after his former lawyer, Michael Cohen, admitted lying to Congress to cover up that he was negotiating a real estate deal in Moscow on Trump’s behalf during the Republican presidential primary in 2016. The news ensured any meeting with Putin would have put a spotlight on the special counsel’s investigation into whether the Trump campaign colluded with Moscow during the election. Trump has denied any wrongdoing.

Russia’s foreign minister Sergey Lavrov called the cancellation a missed opportunity, saying in remarks from Buenos Aires that were carried by Russian state television that he doubted “this move would help settling a number of important international problems.” He added: “Love can’t be forced.”

Trump opened Friday with a cordial meeting at the Casa Rosada with Argentine President Mauricio Macri, a longtime business acquaintance. Posing for photos in the gilded Salon Blanco, Trump spoke about their longtime personal relationship and said they would discuss trade, military purchases and other issues.

“We’ve known each other a long while,” Trump said, noting he worked with Macri’s father on real estate developments. The businessman-turned-politician joked that when he and Macri first met they’d never have imagined their future roles on the world stage.