Trade War Watch: Canada Says It'll Take Its Time Reaching a Deal; Japan's Up for Talks

Canadian Prime Minister Justin Trudeau ignored mounting pressure from the United States to quickly agree to a new NAFTA deal on Wednesday. Trudeau indicated it was possible for the three nations to maintain a trilateral agreement, but noted his priorities would always align with what’s best for Canada. The nation now seems fine with ditching the agreement altogether.

Meanwhile, U.S. President Donald Trump announced that an agreement reached with Japanese Prime Minister Shinzo Abe allows the two countries to begin trade negotiations. The focus of these talks will likely be automotive in nature. Trump has remained oddly fixated with convincing Japan to sell more American-made models ever since taking office, and the Land of the Rising Sun doesn’t want itself saddled with import tariffs.

After months of relative silence, Canada was forced back into the fray after Mexico and the U.S. reached an agreement, announcing their intent to finalize that part of the NAFTA deal before October. Canada was invited to the party, but the window to RSVP is extremely narrow. Trudeau’s words echoed most of our earlier coverage on the matter, citing the various sticking points relating to the deal. But it also cast serious doubt on the likelihood of the nation signing something before the end of the month.

“We will keep working as long as it takes to get to the right deal for Canada,” Trudeau told reporters at the United Nations, adding that he would absolutely walk away from any arrangement that didn’t feel right.

Most Canadian officials seem to agree. “If it doesn’t happen by the end of the week, we’ll just keep working away and trying to get the best deal for Canada,” David MacNaughton, Canada’s Ambassador to the United States, said during a Toronto event arranged by Politico. He also said that, on a scale of 1 to 10, the chances of an agreement by the Sept 30 deadline rated a 5, according to Reuters.

The United States no longer seems to care what Canada does. After months of failed negotiations, U.S. Trade Representative Robert Lighthizer complained this week that Canada wasn’t making enough concessions. A year earlier and those grievances would have been launched at the United States, which was accused of being too selfish in the opening stages of NAFTA renegotiations. Since then, the U.S. made a concerted effort to roll back its demands to encourage Mexico and Canada to play ball. Still, the threat of new auto tariffs remains if its neighbor to the north doesn’t sign something soon.

That ultimatum was also extended to Japan. Prime Minister Shinzo Abe delayed bilateral trade talks with the U.S. after Trump took office, but with tariffs now in the pipeline, the PM agreed to begin discussions on Wednesday.

According to Bloomberg, Japan’s primary goal is to delay or remove the potential U.S. auto tariffs. Sources familiar with the matter compared the Japanese talks to an arrangement the European Union made with the U.S. last July, where the Trump administration agreed to postpone import duties while negotiations progressed.

From Bloomberg:

Toshimitsu Motegi, Japan’s economic revitalization minister, and U.S. Trade Representative Robert Lighthizer on Tuesday agreed on the outlines of the talks, three people familiar with the matter said.

Abe spent much of his political capital on negotiating and finalizing the 12-nation Trans-Pacific Partnership that Trump campaigned against and withdrew the U.S. from in the first days of his administration.

The Japanese leader during the 2016 presidential campaign even met with Trump and tried to convince him to stay in TPP. The 11 remaining nations are planning to implement the agreement in 2019.

Trump will undoubtedly look to strengthen trade between the two nations while carving out a better deal for the United States. That’s likely to include a goal of sending more American autos into Japan. However, no leader within the auto industry or executive branch of the government has managed to pull that particular miracle off without a hitch.

While the U.S. is perfectly capable of shrinking Japan’s trade surplus, we’re less optimistic it can convince its population to buy American. Despite accusations that the country imposes strict import barriers that hampers the ability of Western automakers to do business there, the truth seems to be that the Japanese simply don’t like American cars. There’s an overwhelming prejudice throughout the region that American cars lack in terms of reliability and overall quality. This results in extremely poor sales and lower than average resale values of most Western automobiles vs their Japanese counterparts.

[Image: Canada Summer Games/ Flickr ( CC BY 2.0)]