Trump may need to play nice with Canada on trade talks, this expert warns

United States President Donald Trump’s plan to go it alone with Mexico on a trade agreement may ultimately backfire, says Steven Okun, senior public affairs advisor at McLarty Associates, who argues that the US Congress may nix a two-way US-Mexico agreement.

Donald Trump’s attacks on Canada continued this past weekend as the President again took to Twitter, this time insisting that on the trade front Canada has inflicted “decades of abuse” on the United States and that there is “no political necessity” that Canada be a member to any reworked North American Free Trade Agreement.

But as negotiations between Canada and the US are set to continue on Wednesday, addressing the difficult topics of supply management and auto manufacturing, opinions are divided on how much power Trump has at his disposal to kill NAFTA.

“There are four parties that you’ve got to think about —there’s the US government, the Canadian government, there’s Congress and then there’s the Mexican government,” says Okun, in conversation with CNBC. “Right now, Congress has only given the President the authority to negotiate a three-way deal, a trilateral deal. It is unclear that the President can go forward without Canada.”

“So, we’re really in unchartered territory. It’s very unknown and murky right now,” he says.

Last week, Mexico and the US announced a tentative agreement, while over the weekend, President Trump notified Congress that he intends to sign the new deal within ninety days, whether or not Canada is involved. Under NAFTA’s current construction, any country wishing to withdraw from the agreement is required to give six months notice of their intention.

And while the pressure is on Canadian Foreign Affairs Minister Chrystia Freeland to continue making progress in negotiations with the US, Okun argues that President Trump has effectively tied Canada’s hands.

“We have to think about trade negotiations that there are two buckets, there’s a content bucket and then there’s the political bucket, and both sides need to win both,” Okun says. “Both sides need to say that the agreement is in their favour from content and they need to be able to go back to their people, their voters and say, ‘This is in our favour, too. It’s a win-win.’”

“Trump has given the Canadians no room for a win-win on either the content or the politics and that’s why we’re at this very precarious positions where NAFTA is likely not to get done unless President Trump’s words change,” he says.