By David Lawder and David Shepardson
WASHINGTON/MEXICO CITY, May 26 (Reuters) – The Trump administration intends to maintain tariffs on imports from Mexico and Canada, U.S. Trade Representative Jamieson Greer said on Tuesday as the U.S. launches negotiations to revamp the North American free trade pact.
The U.S. has “significant” trade issues with Canada, Greer told a Council on Foreign Relations event in Washington ahead of bilateral negotiations with Mexico that exclude the northern U.S. neighbor.
“The U.S. is going to have tariffs,” Greer said. “I mean, even with somebody like Mexico, or other countries that are in our own hemisphere, we’re going to have tariffs as long as we have a giant trade deficit.”
His comments that the six-year-old U.S.-Mexico-Canada Agreement will not continue as a tariff-free trade pact echo comments he made privately last month to industry executives in Mexico – that auto and steel tariffs will remain in place under the revamped USMCA.
U.S. and Mexican negotiators are due to meet this week in Mexico City to launch the first formal negotiating rounds, covering revised regional rules of origin and economic security.
Greer, who was interviewed by former Obama administration USTR Michael Froman, who now heads CFR, said he wants to see the U.S. trade deficit with Mexico reduced, and for Mexico to raise its own tariffs on non-North American imports.
Even as the U.S. goods trade deficit fell more than 30% last year to $202.1 billion, the U.S. deficit with Mexico rose nearly 15% to $196.9 billion, according to U.S. Census Bureau data.
Changes to the rules of origin, which most acutely affect the automotive and industrial sectors, will be aimed at encouraging more production in the United States, Greer said, without providing specific details on U.S. demands.
“I think that over the course of these negotiations, we are going to be talking about rules of origin in a way that enhances U.S. content in these goods,” Greer said.
If Mexico and other countries in the region can agree with the U.S. to raise tariffs on external imports, this will make it easier to give preferential tariff treatment to partners within the region.
“Ultimately, at the end of the day, frankly, for national security regions, I want to have our supply chain sourced from this hemisphere, right from North America.”
CANADA PROBLEMS
But Greer said the Trump administration’s issues with Canada go well beyond trade “irritants” and it was difficult to see how the two can work out their differences.
While other countries and the European Union had agreed to accept certain U.S. tariff rates, Canada had retaliated – a distinction it shares with China.
“So they’re just in a different spot, and it’s hard to see necessarily where that ends,” Greer said.
He added that automotive production in Canada, a frequent target of the Trump administration’s criticism, is not a product of natural advantage, but of a government policy to require production in Canada, adding, “We want to build (cars) here.”
(Reporting by David Shepardson and David Lawder; Editing by Mark Porter and Lincoln Feast)
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