Foreign Minister Chrystia Freeland was at home in Toronto at 8 a.m. Friday when she finally nailed down a deal to end U.S. President Donald Trump’s continental trade war.
In a flurry of meetings, phone calls and messages over the previous three weeks, Canadian, U.S. and Mexican officials had negotiated an agreement to have Mr. Trump lift U.S. tariffs on steel and aluminum.
But there was one detail yet to be ironed out: The United States wanted to leave the levies on aluminum in place for two more weeks. Canada insisted they be lifted immediately.
Ms. Freeland, who had landed in Toronto at 2 a.m. after returning from Havana, spoke with U.S. Trade Representative Robert Lighthizer by telephone. He agreed the tariffs could come off within 48 hours.
A few hours later, Mr. Trump spoke with Prime Minister Justin Trudeau to make the deal official, and Ms. Freeland headed to Stelco in Hamilton to announce it with Mr. Trudeau.
One of the most bruising trade fights to roil North America in decades lasted nearly a year but was resolved with less than a month of negotiations. In the end, the Trump administration dropped its most significant demand – that Canada and Mexico accept quotas capping the steel and aluminum they would export to the U.S. – and then made a string of further concessions culminating in Mr. Lighthizer’s final retreat in his Friday phone call with Ms. Freeland.
The behind-the-scenes machinations that culminated in the deal, detailed for The Globe and Mail by two Canadian officials with direct knowledge of the talks, turned on three key factors: the refusal of Mexican and Canadian negotiators to accept quotas; pressure from free-trade-loving congressional Republicans who threatened not to ratify Mr. Trump’s renegotiated North American free-trade agreement while tariffs remained; and the Trump administration’s desire to close one front of its global trade wars while intensifying its fight with China. The Globe and Mail granted the Canadian officials anonymity because they would not divulge confidential information on the talks otherwise.
The negotiations between the U.S., Canada and Mexico began in the last week of April, around the time Iowa Republican Senator Chuck Grassley wrote a blistering op-ed in The Wall Street Journal warning Mr. Trump that the new NAFTA – dubbed the United States-Mexico-Canada Agreement by the President – would not come to a congressional vote until he lifted tariffs on Canada and Mexico. Mr. Grassley and fellow Republicans delivered the same message to Mr. Trump’s face at a White House meeting four days later.
Meanwhile Jesus Seade Kuri, Mexico’s chief negotiator for North American trade, opened talks with Mr. Lighthizer on lifting the tariffs. At first, Mr. Seade told The Globe, Mr. Lighthizer stuck to his long-held demand that Mexico accept quotas if it wanted the tariffs lifted. Mr. Seade refused. Over two weeks, the tension built to a near blowout.
“There was one meeting that was particularly acrimonious when I saw Lighthizer at his most intensive. It was almost a breakup of the dialogue,” Mr. Seade recalled in an interview. “He was saying ‘We have to have this.’ I was saying ‘We cannot have this.’ … There was a lot of yelling ‘There’s no way, there’s no way.’”
But just two days later, the pair were back on the phone and Mr. Lighthizer was ready to concede on quotas. The quid pro quo was that Mexico would have to help the U.S. crack down on Chinese-made steel that was being illicitly shipped to the U.S. through Mexico to get around Mr. Trump’s tariffs.
At this point, Mr. Seade said, he suggested that they pause the talks to give Canada a chance to reach a deal with the Americans. During NAFTA talks last year, Mexico reached an agreement with Mr. Lighthizer first and left Canada scrambling to finish, souring the relationship for a time.
There were calls between Ms. Freeland and Mr. Lighthizer, Mr. Trump and Mr. Trudeau, and meetings between Canadian and American officials. Last Tuesday, Ms. Freeland huddled with Mr. Seade in Ottawa. The next day, she headed for Washington to see Mr. Lighthizer at his office in the Winder Building near the White House.
It was clear at the Wednesday meeting, said one Canadian official, that something had changed for the Americans. Where they had previously been obstinate on quotas, they were now ready to give in.
But there were still sticking points. For one, the U.S. wanted the right to reimpose tariffs on all Canadian steel and aluminum if it detected any surge in exports that could indicate Chinese metals were being routed through Canada. But Canada insisted instead that any tariffs could only be reimposed on the specific item – rebar, say – that was surging.
For another, Mr. Lighthizer wanted to lift the tariffs over a period of time, with levies ending on some products before others, including the two-week period for aluminum.
Ms. Freeland held out for a better deal.
The Foreign Minister left the U.S. capital for Havana Wednesday and spent the next day discussing the crisis in Venezuela with her Cuban counterpart and Canadian embassy staff. She kept in touch with Mr. Lighthizer, working on a deal over messages and phone calls. He ultimately agreed that if he reimposed tariffs, they would only be put on single products.
Late on Thursday, Ms. Freeland flew via Panama to Toronto. She and Canadian officials spent the night and the small hours of Friday messaging each other about the near-complete deal. At 8 a.m., Mr. Lighthizer made his final concession and all was done.
While cutting the deal represents a rare retrenchment of Mr. Trump’s global trade wars, one observer cautioned that it did not mean a change of overall strategy for the White House.
“It’s a single tactic to move forward on [the United States-Mexico-Canada Agreement], and that’s positive,” said Kellie Meiman Hock, a former U.S. trade negotiator and business consultant at McLarty Associates. “But it’s not a trend.”