Canada and U.S. Meet as Trump Moves Ahead With Mexico Trade Deal

Canada and U.S. Meet as Trump Moves Ahead With Mexico Trade Deal

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But these rules were written with the participation of all three North American economies in mind, said Jennifer A. Hillman, a professor at Georgetown Law Center. Cutting out Canada, which is a major supplier of aluminum, steel, automobile components and other goods, could upend the automobile industry’s calculus, making the administration’s proposed rules far more cumbersome than they are already.

“If you can’t include Canada, I’m not sure if they want the rules as they are now,” Ms. Hillman said.

The North American automotive industry is tightly integrated across all three countries. The Ford F-150, for example, although known as a classic American truck, has an aluminum body made with metal sourced from Quebec and window wipers and pistons from Mexico, as well as an engine and transmission produced in the United States.

Charlie Chesbrough, a senior economist at Cox Automotive, said the new trade rules appeared to be a mixed bag for automakers. They are likely to encourage slightly more production in North America, but also push vehicle prices higher, raising costs and decreasing sales. “In the end, they may produce a little more here, but sell a little less,” he said.

He added that manufacturers were unlikely to make any major moves in the short term because changes in production take years of planning. “They can’t change on a dime,” he said.

Canada has its own considerations in deciding whether to join the deal. Leaders there will have to weigh the optics of looking as if they are being strong-armed into a Nafta deal, especially given Mr. Trump’s unpopularity in Canada and a coming election for Prime Minister Justin Trudeau of Canada.

Since Mr. Trump imposed tariffs on Canadian steel and aluminum and insulted Mr. Trudeau as “weak,” the country has coalesced behind its leader and hardened his resolve to get a trade deal that is good for Canadians. Mr. Trudeau has banked his leadership not just on getting a good deal for Canadian workers, but a progressive deal, with chapters on the environment, gender and indigenous rights. He has also defended Canada’s supply management program on dairy and insisted that a sunset clause is a deal breaker.

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