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As reported by CNBC, The US Presidential administration is keeping potential auto tariffs in play while continuing trade negotiations with Canada, while the exact same trade strategy was used to force a “handshake agreement” out of the European Union’s trade delegation to Washington, DC recently.

Key quotes

“A handshake agreement between the U.S. and the European Union reached in late July may have staved off the imposition of auto tariffs for German, French and Italian carmakers.  Still, the White House is reserving the right to impose the tariffs on vehicles made in Canada, a senior administration official told CNBC on Friday. Ford, General Motors, Honda and Fiat Chrysler are among the automakers with operations in Canada.

“Probably sometime in the month of August we’ll be willing to render a report. It may not be necessary, or it may be necessary. We will see,” Commerce Sec. Wilbur Ross told reporters aboard Air Force One on July 26. “But the work is continuing.”

The suggestion comes as Canada remains on the sidelines of potential NAFTA negotiations, which the U.S. and Mexico continued in Washington last week. Mexico has maintained it would like a trilateral deal, with representatives maintaining close contact with Canadian counterparts, namely Foreign Minister Chrystia Freeland.  “We speak to her almost every day,” Mexico’s foreign minister Luis Videgaray told reporters Friday.

By contrast, talks between the Trump administration and Canada have been characterized as difficult, the senior U.S. official said, noting that relations had soured since Prime Minister Trudeau’s press conference at the G7. The official acknowledged that with Mexico’s election in the rear view, Trudeau’s 2019 re-election bid may become a complicating factor.  “Auto tariffs would not be good for Trudeau,” the senior administration official said, without elaborating on at what point in talks the U.S. would potentially consider introducing them.”