U.S. Trade Representative Robert Lighthizer said the Trump administration has offered to exclude Canada and Mexico from tariffs on steel and aluminum as an incentive to reach a deal on a new NAFTA before a string of elections make it difficult.
President Donald Trump's "view was that it makes sense that if we get a successful agreement, to have them be excluded," Lighthizer told reporters in Mexico City on Monday following the seventh round of talks to renegotiate the North American Free Trade Agreement. "It's an incentive to get a deal."
Meanwhile, Lighthizer said the U.S. may take a pause in negotiations for the Mexican election in July, if no deal is reached in the near term. "Our time is running very short," Lighthizer said during a ministerial briefing.
The tariff threats have cast a pall over talks that are already in overtime. While Canada and Mexico cited agreements on individual chapters as signs of progress, there's no sign of any breakthrough on the most controversial subjects that will be key to reaching a deal to update a pact that Trump has repeatedly threatened to quit.
Campaigning will take off next month for Mexican presidential elections scheduled for July 1, and U.S. congressional midterms are set for later this year. "All of these complicates our work," Lighthizer said. In a more conciliatory sign, he avoided some of the harsh language he used at the end of previous rounds.
"I feel the longer we proceed, the more political headwinds we will feel," Lighthizer said. "We are prepared to work continuously to achieve a breakthrough."
Trump, in a tweet early Monday, first floated the idea of excluding Canada and Mexico from the tariffs if they accept U.S. demands for improving NAFTA. Trump's decision on March 1 to impose a 25 per cent tariff on imported steel and 10 per cent on aluminum caught negotiators off guard in the middle of the talks over the free-trade deal.
Canadian Foreign Minister Chrystia Freeland, speaking at the briefing in Mexico City, repeated the threat of retaliation if the White House imposes the duties on its northern neighbor. Mexican Economy Minister Ildefonso Guajardo said it's sensible to exclude Mexico from the tariffs and that his country could respond with trade measures of its own.