WASHINGTON — The Trump administration's strategy on the North American Free Trade Agreement has been turned on its head.
When President Donald Trump forced renegotiations on the pact, the guiding narrative was that Mexico has a US$71 billion trade surplus with the United States and is luring manufacturers south of the border at the expense of American workers.
But coming out of the Montreal round of talks — which observers and participants interpreted as a positive step toward an agreement — it's Canada that has emerged as the central focus of Washington's negotiating efforts, and frustrations.
Indeed, in his closing statement in Montreal, U.S. Trade Representative Robert Lighthizer barely even mentioned Mexico. Instead, he sharply rebuked the northern neighbour on several matters and drew attention to an US$87 billion goods deficit with Canada in 2016, including energy.
That conflicts with official figures on the USTR's website that show a merchandise trade deficit with Canada of US$12 billion and a goods and services trade surplus of US$12.5 billion in 2016.
"Canada has become the focal point," said Eric Miller, a well-connected trade consultant and president of Rideau Potomac Strategy Group. "The perception within the USTR is that were it just Mexico, the pathway to a deal would be much easier because the U.S. could just streamroll the Mexicans," who face a presidential election this summer and have the most to lose if NAFTA unravels.