US and Canada ease trade fears with last-minute deal to revamp Nafta
Canada struck a dramatic eleventh-hour trade deal with the US and Mexico last night, putting an end to a year of tense economic negotiations in North America.
In an effort to revamp the current North American Free Trade Agreement (Nafta), the three countries reached a trilateral agreement only hours before a midnight deadline, quelling threats from US President Donald Trump that Canada could be excluded from the new pact.
The new deal, branded as the United States-Mexico-Canada Agreement (USMCA), is set to give US farmers more access to Canada’s dairy market and ease Canadian concerns about US auto tariffs, according to officials.
Read more: Great expectations: Let’s go for the free trade deal Britain deserves
The agreements comes after months of tortuous and often bitter negotiations between the US and its neighbours both to the north and south.
Trump had made the renegotiation of Nafta a key election promise in 2016, and has ramped up trade tensions in the last several months after slapping tariffs on Mexican and Canadian steel and aluminium imports.
In June, Mexico retaliated with a wave of new levies on US goods such as bourbon and pork, while Canada also hit back a month later with tariffs on $16bn worth of American products.
Read more: WTO urges US and China to show restraint as it cuts trade growth forecasts
However, trade officials will be hoping that the new three-way compromise, which is now set to face the vote of US lawmakers in Congress, will be the start of a calmer relationship between the countries.
In a joint statement US trade representative Robert Lighthizer, and Canada’s foreign minister, Chrystia Freeland, said: "USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region.
"It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home."
Yet while a trilateral deal in North America is likely to quell fears around Trump’s more protectionist agenda, escalating US tensions with China show no sign of slowing down.
The White House has already imposed levies on $250bn of Chinese goods, with Trump warning that even more could be on the way.
China has hit back in the tit-for-tat war, recently accusing the US of launching the "largest trade war in economic history."