Free Trade

Grassley to Trump: End the Tariffs or We'll Kill Your NAFTA Rewrite

A key senator issues the sort of binary, transactional choice that Trump seems to prefer. Will the POTUS listen?

|

There's only one way for President Donald Trump to get his much-touted rewrite of the North American Free Trade Agreement (NAFTA) through Congress: End the tariffs.

That's the blunt message that Sen. Chuck Grassley (R–Iowa) delivers in an op-ed that ran in Sunday's Wall Street Journal. Grassley's opinion matters more than most, given that he is chairman of the powerful Senate Finance Committee, which would likely have to give its approval to Trump's United States-Canada-Mexico Agreement (USMCA) before it could face an up-or-down vote from the full Senate.

Congress must approve the USMCA before it can take effect, but Grassley says it will not do that until the Trump administration lifts tariffs on steel and aluminum imports from Canada and Mexico. "These levies are a tax on Americans, and they jeopardize USMCA's prospects of passage in the Mexican Congress, Canadian Parliament and U.S. Congress," he writes. "Canadian and Mexican trade officials may be more delicate in their language, but they're diplomats. I'm not. If these tariffs aren't lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place."

Grassley is concerned not only about the tariffs' effects on American businesses—many of which face higher prices due to the administration's import taxes—but about the retaliatory tariffs placed on U.S. goods by Canada and Mexico, which have hit American farmers.

"Jobs, wages and communities are hurt every day these tariffs continue—as I hear directly from Iowans," he writes. "It's time for the tariffs to go."

Rewriting NAFTA has been a priority for Trump since the start of his presidential campaign. In his State of the Union address this year, Trump called for Congress to replace "the catastrophe known as NAFTA"—though in reality, the USMCA is only a modest overhaul.

As Congress returns from recess this week, it is putting the squeeze on Trump's USMCA plans. While some Republicans remain skeptical of the USMCA because it creates higher barriers for tariff-free trade of cars and car parts, many Democrats are seeking changes to the USMCA that will beef up enforcement mechanisms. Sens. Sherrod Brown (D–Ohio) and Ron Wyden (D–Ore.) have proposed stricter audit rules that would give the U.S. the ability to reinstate tariffs on certain goods if Mexican factories are found to be skirting USMCA rules about wages and other labor standards.

With Democrats preparing to fight, Trump can hardly afford to lose support from Republicans too.

Grassley's message to Trump is exactly the kind of binary, transactional negotiating tactic that the president seems to prefer. But the substance of Grassley's op-ed is not exactly new. Congress—and outside interest groups—have been signalling to the White House for months that lifting the tariffs would be an essential condition for passing the USMCA. In November, shortly after Trump finalized the USMCA in a meeting with Canadian Prime Minister Justin Trudeau and then–Mexican President Enrique Peña Nieto, I reported that the steel and aluminum tariffs were a major stumbling block for getting the deal through Congress.

Since then, Trump has given no indication that he's willing to withdraw the tariffs on Canadian and Mexican metals. The ball now appears to be in the president's court.

Advertisement