Here we go again. Talks started this week for a revamp to the USMCA trade deal between the US, Canada and Mexico, formerly known as Nafta. Donald Trump’s earlier renegotiation in 2018 secured a change of name but not much difference in substance. His simple-minded protectionism now threatens at best further irrelevant tinkering and at worst a serious rupture.As usual no one knows what Trump will do, including him. On the one hand, he has long hated Nafta, which soon acquired cartoon super-villain status among US globalisation sceptics after its launch in 1994. On the other, last year he carved out partial USMCA-related exemptions to his general tariffs to mitigate the blow to cross-border North American auto supply chains.
In truth, each Trump-induced iteration takes the discussions further away from reality. Certainly, the US exerts a colossal gravitational pull on its neighbours — whatever it might dream, Canada will not become a trade or geopolitical annex of the EU. But in rapidly expanding areas of trade integration, particularly green tech and specifically electric vehicles, Trump has largely decided to pull the US out of the game altogether.
In the talks with Mexico this week, US trade representative Jamieson Greer is focusing on an issue his predecessor and mentor Robert Lighthizer spent a lot of time on in the previous negotiations — tinkering with rules to coerce more of the production network to locate in the US.