A top GOP senator warns that Trump's massive trade deal with Canada and Mexico is 'dead' unless the president reverses his tariffs

  • The Trump administration reached a deal to update the North American Free Trade Agreement (NAFTA), now named the US-Mexico-Canada Agreement (USMCA), in October.
  • But the USMCA must still be ratified by Congress before it can go into effect.
  • Sen. Chuck Grassley, who chairs the Senate Finance Committee, which oversees the ratification of trade deals, said in a Wall Street Journal op-ed that he would not move forward with ratification unless Trump drops tariffs on steel and aluminium from Mexico.
  • Grassley’s op-ed adds to a litany of problems facing the deal.
  • Visit Business Insider’s homepage for more stories.

Sen. Chuck Grassley did not mince words when it came to President Donald Trump’s trade policy in an op-ed for The Wall Street Journal published on Monday.

As the powerful Senate Finance Committee chairman, Grassley has significant say over whether the US-Mexico-Canada Agreement (USMCA), a revised version of the North American Free Trade Agreement (NAFTA) agreed upon by the Trump administration, Canada, and Mexico in October 2018, will make it through Congress.

In the op-ed, Grassley put it simply: Trump must lift his tariffs on steel and aluminium coming from the USMCA partner countries or one of the biggest achievements of Trump’s trade war is “dead.”

“These levies are a tax on Americans, and they jeopardize USMCA’s prospects of passage in the Mexican Congress, Canadian Parliament and US Congress,” Grassley wrote. “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.”

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Both the House and the Senate must ratify the USMCA.

Democrats have expressed concerns over the deal’s enforcement mechanisms and protections for workers, already putting the passage of the deal in doubt. But Grassley’s opposition adds another layer of problems.

While Grassley praised the potential economic benefits of the USMCA, the Iowa Republican said that the metal tariffs and the retaliatory tariffs on US goods put in place by Canada and Mexico are “a tax on Americans” and are harming the American economy.

Given the pain that the tariffs are causing, Grassley said the elimination of those tariffs is a precondition of congressional consideration of the USMCA.

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In addition, Grassley said that ratification of the USMCA in both the Canadian and the Mexican legislatures would be much more difficult with the tariffs in place.

As it stands, the Canadian Parliament has not taken up the USMCA for ratification, and with federal elections in the country looming, the possibility that the deal will be sealed by the country’s legislature before 2020 is slim. And as Grassley said, Canadian officials have explicitly said that ratification will not move forward while the steel and aluminium tariffs are in place.

The Mexican government has also not moved the entire USMCA forward yet, though it has taken some steps to address the labour provisions of the deal. But as with Grassley and Canada, Mexican officials have made it clear that the trade deal won’t budge until the steel and aluminium tariffs are gone.

That means Trump’s signature trade victory now has to win over the Democratic House majority, the Republican chairman of the Senate committee overseeing the ratification process, the Canadian government, and the Mexican government.

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