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President Trump has promised tariffs on Mexico and Canada, but the United States actually made a trade deal with its neighbors during Trump's first term. So what's the deal with that deal? NPR White House correspondent Asma Khalid reports.
ASMA KHALID, BYLINE: The other day, I swung by an international trade conference here in Washington. Lawyers from major American companies spoke about the erratic economic environment they are trying to navigate these days. One of the guys joked about a recurring dream where he's running down a hill, and all of a sudden, a Harley Davidson flies by, and Jack Daniel's bottles and Levi's jeans. It was a reference to the popular American products facing potential retaliation for Trump tariffs. The crowd chuckled nervously because they are tariff experts. They're people like Eduardo Diaz.
EDUARDO DIAZ: I am a trade lawyer, and I'm based in Mexico City. And I specialized in trade, customs and international agreements.
KHALID: In his view, the threat of tariffs on a whole bunch of Mexican and Canadian products undermines the very reason for having a free trade deal.
DIAZ: What we're looking at now is not normal. Once you have a trade deal, you're not supposed to go back on the deal. And this is what's actually happening now.
KHALID: And what makes this moment all the more confusing is that this existing deal, known as USMCA, was not crafted under Democrats. Trump made this deal to replace NAFTA, which was signed in the early 1990s. Take a listen to what he had to say when he signed the agreement in the summer of 2020.
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PRESIDENT DONALD TRUMP: Today, we're finally ending the NAFTA nightmare and signing into law the brand new U.S.-Mexico-Canada Agreement - very special.
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TRUMP: Very, very special.
KHALID: He said it was a partnership with Mexico and Canada. And even during his recent reelection campaign last fall, he referred to it as the best trade deal ever made, they say. Trade experts say it was supposed to allow the three countries to work together, but Matthew Holmes with the Canadian Chamber of Commerce says it seems like the Trump administration is walking away from the deal.
MATTHEW HOLMES: I have never in my lifetime seen a response I'm seeing in Canada right now towards the United States. And it's very negative.
KHALID: His chamber represents some 200,000 Canadian businesses. Holmes says if these tariffs are a negotiation tactic by the American president, it seems like an unwise strategy.
HOLMES: What I say to that is rip up our trade agreement once, shame on you. Rip it up twice, shame on me. I don't think we'd move into a third renegotiated agreement with any sort of certainty or expectation that the United States can be trusted moving forward.
KHALID: The existing deal is pretty clear - no new widespread tariffs, but it does allow exceptions for national security, and in theory, that is President Trump's justification for these new tariffs. He points to illegal immigration and illicit drugs coming across the border. But he's also sending mixed messages. In a recent interview with Laura Ingraham on Fox News, he accused Canada of cheating on the deal.
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TRUMP: And USMCA's good, but they cheat. You know, an agreement's good, but they cheat. And Mexico cheats also.
LAURA INGRAHAM: But China cheated...
KHALID: A White House official who was not authorized to speak publicly about policy told NPR the world has changed since USMCA went into effect and said China has been trying to bypass tariffs, using Mexico as a middleman for Chinese steel. Frankly, that concern about China is somewhat bipartisan. But the question is, how do you deal with that problem? For now, it seems Trump's strategy is tariff first and then maybe reach a trade deal later. USMCA is set to be reviewed next year. Asma Khalid, NPR News.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.
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