To hear President Donald Trump tell it on Monday, the United States is abandoning the NAFTA free trade deal between the US, Canada and Mexico in favor of a bilateral agreement between the US and Mexico.
Details of gains and concessions in the deal were only starting to emerge on Monday. But Trump suggested she would have to agree to terms fast, or he'll simply slap tariffs on Canadian auto exports to the U.S. "You know, . the farmers have stuck with me; I said we were going to do this".
In an Oval Office phone call with Mexican President Nieto, President Trump explained his reasons for renegotiating the North American Free Trade Agreement, including dropping the name NAFTA. Trump said he would talk to Canadian Prime Minister Justin Trudeau soon. Now, the US could use its new tariffs on lumber as a negotiating tool to provide leverage in that dispute.
It's a preliminary deal between the two countries. "Canada's signature is required", spokesman Adam Austen said.
Canadian Foreign Minister Chrystia Freeland is expected to travel to Washington for talks on Tuesday.
USA law requires Trump to give Congress 90 days' notice of his intention to sign a new trade deal. "It will either be a tariff on cars, or it will be a negotiated deal; and frankly a tariff on cars is a much easier way to go, but perhaps the other would be much better for Canada".
The breakthrough between the USA and Mexico involved an agreement on the amount of North American content a vehicle must have in orderto pass duty-free across borders. But some critics have said it would be smaller than NAFTA, the trilateral deal Trump is seeking to terminate.
It would be hard to imagine Congress approving anything that did not include Canada, the nation's third largest trading partner behind the European Union and China. Asked about whether Mexico would be willing to sign a deal without Canada, a senior Administration official demurred, offering arguments for why the country might want to without saying that it would.
"It was indeed a point of tension, of public and notorious differences between Mexico and the United States, but I think that the decision we made not to allow a difference to define the rest of the relationship, that we could see beyond that difference, today is giving very obvious results", Mr Videgaray said in an interview with Bloomberg in Washington.
How does the new deal compare to the original NAFTA? It also would require 40 to 45 percent of auto workers make at least $16 per hour. The government says the changes will "incentivize billions a year in vehicle and automobile parts production in the United States, supporting high-wage jobs".
The U.S. Congress wouldn't vote on it until next year - after November midterm elections that could end Republican control of the House of Representatives. "This is really a huge deal for the corn industry".
Some Japanese automakers could face a similar challenge, but their responses on Tuesday were mostly positive. "Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement".
"We are hopeful that any changes are fair and balanced".
"We think this is going to lead to more trade, not less trade", said Robert Lighthizer.
In May, the United States imposed steep tariffs on steel and aluminum from much of the world, including Mexico.
A sunset clause: The agreement is written to last for 16 years, but would allow the countries involved to revise or modernize aspects of the deal every six years.