US trade relations at a low, as China set for new tariffs and amid fears Trump will leave NAFTA

U.S. Trade Representative Robert Lighthizer reportedly spoke Sunday with Canadian Foreign Minister Chrystia Freeland after Navarro’s comments and is expected to meet with her while she is in Washington this week, according to The Wall Street Journal.

“If [Trump] thought putting tariffs on Mexico and Canada would give him leverage, it backfired,” Leblond said. Trump’s posture toward Trudeau has not helped, he said.

“Even if he threatens to withdraw [from NAFTA] or invokes article 2205 and notifies that he intends to leave, I think both Canada and Mexico would say, ‘Go ahead, try your luck,'” Leblond said, referring to a provision in the NAFTA agreement. “We’ll see how the U.S. political system works and what happens, whether you’ll be able to do that.”

“Certainly from the Canada side, we’re bracing for a fight. It’s pure bullying, and we’re going to fight back,” he said. “With Congress, Canada has done a lot of lobbying and engagement and that will continue.”

Leblond said some trade lawyers believe Trump does not have authority to exit NAFTA without congressional approval since it put the trade act into law. Business leaders, trade groups and many members of Congress oppose leaving the trade agreement, which has spawned a web of interrelated industries and supply chains across all three countries.

“Congress could try to challenge Trump’s authority,” Leblond said. “I could see this mired in the courts for quite a while.” He said it could ultimately be decided by the Supreme Court.

Clifton also expects a bitter fight if Trump attempts to withdraw.

“We believe there would be a private lawsuit, and we believe congressional leadership would sign on to that private lawsuit, and the lawsuit would say the president doesn’t have the authority to pull out of NAFTA,” he said. “That’s one school of thought.” He said the suit could be brought by a business group or association.

Hartasanchez said even with the six-month period that would pass after a withdrawal from NAFTA is announced, it could still be in effect because of the anticipated legal challenges.

“Everything is related. Mexico had nothing to do with G-7, but now given Canada’s decision as a host of G-7, it has put Mexico in a difficult position with NAFTA,” said Hartasanchez.

Aside from NAFTA, trade experts say another concern is the possibility Trump could impose tariffs on imported cars. The administration is investigating whether it should do so on the grounds of national security. Congress is attempting to push legislation that would block Trump from using national security as a reason for tariffs without congressional approval, but it’s not seen as having much chance.

According to the Peterson Institute, 187,000 U.S. jobs could be lost if the U.S. withdraws from NAFTA, over a one- to three-year period, and even more if the U.S. drops out of the Canada- United States Free Trade Agreement.

If the U.S. leaves NAFTA, Mexico and Canada would remain in it unless they also withdrew.