Crunch Time Looms for Trump’s New Nafta

(Bloomberg) --

Signed by Canada, Mexico and the U.S. more than seven months ago, the new Nafta agreement isn’t so new anymore. But it may be close to grabbing the spotlight again.

With the U.S.-China trade war on autopilot, the White House is shifting attention back to Nafta’s replacement — known as the USMCA — and more specifically how to get the pact approved by the Democrat-led House.

Not everyone in the Trump administration agrees on how hard to push.

On one side, Vice President Mike Pence’s staff and others are exasperated with the slow pace at which Democrats are demanding changes and offering solutions. Those officials see one way forward: force a vote on the revamped North American trade pact as soon as this month. Next Tuesday is the first day Trump can send the USMCA implementing legislation to Congress, starting the clock for lawmakers to take it up.

On the other side, officials including U.S. Trade Representative Robert Lighthizer don’t feel a particular urgency to ram a vote through  Congress. But his continued patience will require some clear evidence that Democrats are seriously engaged.

Congressional staffers caution that sending the legislation before Speaker Nancy Pelosi gives the green light would only cause delay. She wants to do minor surgery to the agreement before Democrats sign on. Too much stonewalling, though, might provoke Trump to give notice he’s withdrawing the U.S. from the existing Nafta. The U.S. traded more than $1.2 trillion in goods with its two closest neighbors last year.

Mexico has already ratified the pact, and Prime Minister Justin Trudeau has signaled Canada’s approval process is aligned with Washington’s. So the U.S. political calendar could dictate the next steps. With no end in sight for a deal with China, Trump will want to hail his U.S.-Mexico-Canada-Agreement as a major trade victory as he campaigns for re-election next year.

Charting the Trade War

Switzerland exports more goods across the border to the southwestern German state of Baden-Wuerttemberg than to China. That’s something for Switzerland to consider as it remains locked in a dispute with the European Union over a political treaty.

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• Trump’s FX wars | The American president is stepping a currency war of words with Europe and China, saying they are manipulating the euro and yuan at the U.S.’s expense. 
• Distorted trade deficit | A wider U.S. trade shortfall may reflect companies rushing shipments ahead of Trump’s latest increase in tariffs on Chinese imports announced in May.

Economic Analysis

• Made-in-Vietnam | A look at Vietnamese shipments to the U.S. explains why it become a trade war target.
• Exclusion confusion | Steel, aluminum users say the U.S.’s tariff exclusion process is costly and slow.
• Weakening trade | Shippers are unlikely to see volume boosts as front-loaded orders bloated inventories.

To contact the editor responsible for this story: Sarah McGregor at smcgregor5@bloomberg.net, Brendan Murray

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