OTTAWA— Prime Minister Justin Trudeau didn’t know that U.S. President Donald Trump was about to slap new tariffs on Mexico when he vowed Thursday to usher changes to the North American Free Trade Agreement through Parliament, his officials said Friday.
A senior government source said U.S. Vice-President Mike Pence gave no heads-up to Trudeau that the tariff move was pending during Pence’s visit to Ottawa on Thursday.
Pence and Trudeau did speak about Trump’s concerns regarding the southern U.S. border, said the official. That has been a preoccupation of the president’s since before he was elected on a promise to build a wall at the border with Mexico, and force Mexico to pay for it.
When Trump tweeted that the U.S. would impose a five-per-cent tariff on all Mexican imports starting June 10, Trudeau was unaware the announcement was coming. However, Canadian officials have learned “to expect the unexpected” from his administration, said the official, speaking on a background-only basis.
The threat of new tariffs on Mexico, which is the largest source of U.S. vehicle and auto-parts imports, sent North American stock markets tumbling Friday.
But the Canadian government still believes the new NAFTA will be ratified, said the official, pointing to Mexican President Andrés Manuel López Obrador’s statement Friday that the tariff threat “does not stop the process that was already started to ratify the deal. We’re going to continue.”
Trump’s move came in a week when all three governments had taken concrete steps to push ratification forward.
Mexico began its formal process of approving the deal on Thursday, a day after Trudeau introduced legislation to proceed to ratification.
The Conservative Party has criticized the legislation, saying the Liberal government gave up too much in the new NAFTA and inserted a clause that recognizes the deal could still change even after it is approved by Parliament.
Standing next to Pence at a news conference Thursday, Trudeau said he was “confident that the work being done on ratification is possible because we made sure that from multiple angles, this was a better deal for Americans, for Canadians and for Mexicans.”
But the U.S. president’s tariff tirade — which continued Friday — could undermine all that.
Trump tweeted Thursday that the U.S. would impose a five-per-cent tariff on all goods entering the U.S. from Mexico “until such time as illegal migrants coming through Mexico, and into our Country, STOP.”
He said the tariffs would start June 10 and gradually increase until illegal migration halted.
On Friday morning, Trump used a series of tweets to expand on the conditions Mexico must meet, saying it “has taken advantage of the United States for decades” on immigration, auto exports and on the illegal drug trade.
He wrote that “Mexico makes FORTUNE from the U.S.” and “can easily fix this problem. Time for them to finally do what must be done!
“In order not to pay Tariffs, if they start rising, companies will leave Mexico, which has taken 30% of our Auto Industry, and come back home to the USA. Mexico must take back their country from the drug lords and cartels. The Tariff is about stopping drugs as well as illegals!”
Trump also referred to drugs coming across the border, saying “80,000 people died last year, 1,000,000 people ruined. This has gone on for many years & nothing has been done about it. We have a 100 Billion Dollar Trade Deficit with Mexico. It’s time!”
The office of the United States Trade Representative reports that the U.S. goods and services trade deficit with Mexico was $72.7 billion in 2018.
Bloomberg reported the move rattled global financial markets as investors were counting on slow but steady progress toward congressional approval of the modernized trade deal. The tariffs represent a de facto dismantling of NAFTA, which could unite a broad coalition of manufacturers, farmers and bipartisan lawmakers against the president the year before he seeks re-election.
The Mexican peso weakened by as much as three per cent after Trump’s tweets, while investors fled to the safest assets as concerns over new trade conflicts mount. The Japanese yen gained while U.S. futures tumbled and 10-year Treasury yields reached a fresh 20-month low.
By using tariffs to score political points on border security with the element of his voter base most opposed to illegal immigration, Trump jeopardizes a real legislative win and the economic growth that continues to prop up his popular approval.
With files from Bloomberg News
Tonda MacCharles is an Ottawa-based reporter covering federal politics. Follow her on Twitter: @tondamacc