Trump is driving a wedge between Canada and Mexico that will hurt US

Mexico’s
President Enrique Pena Nieto, Canada’s Prime Minister Justin
Trudeau and U.S. President Barack Obama shake hands while posing
for the family photo at the North American Leaders’ Summit in
Ottawa, Ontario, Canada, June 29, 2016.
Reuters/Chris Wattie

• The North-America Free Trade Agreement (NAFTA) hangs in
  the balance following acrimonious negotiations, including leaks
  of unflattering comments from US President Donald Trump about
  his Canadian counterparts.
• “Many Canadians feel as though Mexico has turned its
  back on them,” said Duncan Wood, director of the Mexico
  Institute.
• This wedge between two key allies could come back to
  hurt the United States.

The North-America Free Trade Agreement (NAFTA) hangs in the
balance following acrimonious negotiations. 

President Trump seems bent on wrecking the trade agreement
despite Mexico and Canada’s best efforts to salvage
it. His dismissive remarks toward his Canadian
counterparts were
leaked to the Toronto Star, making it even harder for Prime
Minister Justin Trudeau and his chief trade negotiator, foreign
minister Chrystia Freeland, to find common ground with the United
States.

But perhaps one of the worst impacts from Trump’s
bull-in-the-China-shop approach to trade negotiations is what
he’s managed to do to relations between Mexico and Canada. By
trying to negotiate individually, Trump employed a
divide-and-conquer strategy that may prove counterproductive
given the level of integration of North American supply chains,
particularly in the manufacture of big-ticket goods like cars and
airplanes.

“We know that was not well received in Canada. Many
Canadians feel as though Mexico has turned its back on them,”
said Duncan Wood, director of the Mexico Institute, in a
telephone briefing with reporters.

“Mexico has gone from the bad guy to the friend and Canada
is now the” apparent foe, he said.

Jorge Castaneda, Mexico’s ex-foreign minister, told
Bloomberg that, while it is “desirable” for Canada and Mexico to
cooperate, the two have different issues and industries at stake.
“
I’m
not sure it’s that easy, because many of the most worrisome
issues for one country are not that important for the other,” he
said.

The auto sector, with its highly-integrated supply chains, is
one key link that connects all three nations. But there are big
differences in agricultural demands, and in the specifics of
labor and environmental concerns addressed in the
agreement. 

How could this come back to haunt American
businesses?

Already, there’s evidence that uncertainty over trade is
dampening US business investment plans. The collapse of a
long-standing agreement such as NAFTA, while it can still be
averted, would be quite a
shock to the economies involved — and to financial markets
already rattled by rising
risks from emerging markets.