Trump to advance trade deal with Mexico after NAFTA talks with Canada falter

WASHINGTON - High-stakes trade negotiations between the White House and Canadian leaders unraveled Friday, amid strains caused by lingering divisions and comments President Donald Trump made that suggested he would refuse to offer any concessions.

The breakdown put Trump's effort to redraw the North American Free Trade Agreement in legal limbo. The White House formally notified Congress on Friday that it will enter into a trade agreement with Mexico. The letter stipulated that Canada could also be added "if it is willing."

But it is unclear whether a three-nation trade pact can be replaced under congressional rules with a two-nation agreement. White House officials vowed to continue discussions with Canada, and talks are expected to pick back up on Wednesday.

"The talks were constructive, and we made progress," U.S. Trade Representative Robert Lighthizer said in a statement.'

But Trump seemed willing to leave Canada out of a final deal.

"If we don't make a deal on Canada, that's fine," Trump said Friday at an event in Charlotte, North Carolina.

Sending the letter to Congress on Friday begins a formal 90-day process for reworking the trade deal, a deadline the White House believes is necessary in order to get approval from the outgoing government in Mexico.

The White House's letter to Congress caps off a chaotic day of posturing and brinksmanship between the U.S. and one of its closest allies. U.S. and Canada appeared to be within striking distance of a deal on Thursday, but a number of key issues remained unsettled.

They couldn't agree, for example, on U.S. demands over dairy policy, and they also hadn't reached agreement about patent protection for pharmaceuticals or how to resolve disputes going forward.

Canadian officials felt that the U.S. team wasn't willing to budge, a sentiment that appeared to be validated on Friday morning after the Toronto Star published off-the-record comments Trump had made one day earlier to Bloomberg. Trump told Bloomberg journalists negotiations to rework the North American Free Trade Agreement would only be done on his terms, suggesting he would not offer any concessions to Canada.

Trump later confirmed making the comments to Bloomberg, though he complained they were not intended for publication.

"Wow, I made OFF THE RECORD COMMENTS to Bloomberg concerning Canada, and this powerful understanding was BLATANTLY VIOLATED," Trump wrote on Twitter. "Oh well, just more dishonest reporting. I am used to it. At least Canada knows where I stand!"

The Star quoted Trump as saying he was not going to offer Canada any concessions. But, Trump said, he couldn't admit this publicly because "it's going to be so insulting they're not going to be able to make a deal."

Canadian Foreign Minister Chrystia Freeland, who was in Washington meeting with White House officials when the news of the comments broke, would not comment directly on Trump's role in the negotiations.

The White House wanted a firm commitment from Canada to rework NAFTA by Friday. Freeland said Canadians would not be pushed into a deal that's not in their interest, asserting the White House needed to soften some of its demands.

"At the end of the day, we are only going to sign a deal that's good for Canada," she said.

It couldn't immediately be learned whether the setbacks would prove temporary or could threaten Trump's ultimate goal of reworking NAFTA, a core promise of his 2016 presidential campaign.

Freeland met twice with U.S. Trade Representative Lighthizer on Friday. She had a much more subdued tone Friday than in past days, when she has repeatedly said she was "optimistic" about progress. She didn't use that word on Friday.

"We're not there yet," she told reporters during a break from meetings. She said they would meet again later in the day.

When asked if the U.S. was negotiating in "good faith," Freeland paused for a moment before saying Lighthizer was "working really, really hard." She did not mention Trump by name.

Canadian officials had previously expressed frustration that they believed the White House wasn't willing to budge on a range of demands, including dairy policy, dispute resolution, and the patent protections for pharmaceuticals. Trump's off-the-record comments, first published in the Star, may have validated their fears, as it suggested Trump was stringing the Canadians along and willing to mock the country to journalists.

Such comments could make it harder for Canadian Prime Minister Justin Trudeau to cut a deal with Trump, as Canadians could question the deal's value back home.

Freeland didn't address Trump's alleged comments in her brief meeting with reporters, though she did say that there had "been moments of drama throughout" the talks.

The White House has set its own deadline of Friday for the completion of negotiations on a preliminary deal with Canada, part of Trump's goal to get a new pact signed before Mexican President Enrique Peña Nieto leaves office Dec. 1.

Trump has said he will forge ahead without Canada if necessary and complete a new trade agreement with Mexico, a preliminary version of which Trump announced on Monday. But GOP lawmakers in Congress have said they would oppose any changes unless Canada is involved.

Canada could be added later into preliminary U.S.-Mexico deal, but that would involve legal complications and add fresh scrutiny from Congress.

Completing the process of reworking NAFTA, could ulimately take months or even years, as a vote from Congress would only follow a lengthy review process and potentially contentious debate. Some GOP lawmakers expressed hope Friday that all parties would ultimately cut a deal, despite lingering differences.

"I hope they make the deadline, and I think they're hard at work at it," Sen. Pat Roberts, R-Kan., said. Of the longstanding tension between the U.S. and Canada, Roberts remarked, "Well, I think maybe that situation got off on the wrong foot."

Trump has tried for months to pressure Trudeau into a series of trade concessions, imposing tariffs on Canadian steel and aluminum imports and vowing to enact similar penalties on automobiles and auto parts. Trump has badmouthed and even mocked Trudeau in public and private a number of times this year.

Trump has called Trudeau "meek" and "mild." Trudeau has responded to Trump by saying "we will not be pushed around."

Despite the bad blood, the U.S. and Canada have interwoven economies, with integrated supply chains and vast amounts of trade. Goods and services sold between the two countries last year reached $673.1 billion, making Canada the United States' largest export market for goods.

Canada has responded angrily to Trump's adversarial trade approach this year. Trudeau and his team imposed their own tariffs on U.S. goods as a way to try and counter the steel and aluminum tariffs Trump imposed on Canada, fueling concerns of a trade war.

Trump has long believed that NAFTA, enacted in 1994, decimated the U.S. manufacturing base by incentivizing companies to move jobs to lower-wage Mexico. But many business groups have said NAFTA actually helped grow the U.S., Mexican and Canadian economies more broadly, even if it did lead to job losses in certain sectors as factories moved from one country to another.

Last year, Trump threatened to withdraw from NAFTA completely unless Mexico and Canada made major concessions, but he was talked out of it by business leaders and some of his closest advisers, including Agriculture Secretary Sonny Perdue.

During the 2016 campaign, Trump focused much of his ire at Mexico, but he has spent much of the past year leveling attacks at Canada for what he has alleged is unfair government support for their dairy industry, among other things.

Three-nation negotiations moved slowly and then seemed to hit a wall in June after Trump left the Group of Seven nations meeting early and unloaded a series of attacks at Trudeau.

This prompted White House officials to concentrate their negotiations with Mexico, a strategy that appeared to work as both countries announced they had resolved most of their disagreements on Aug. 27.

That gave Canada just a few days to re-engage in order to meet the White House's Friday deadline. Freeland rushed back from Europe and spent several days meeting with Lighthizer.

She had expressed optimism several times about the way things were progressing, but they had delayed any decisions on the thorniest issues, including dairy policy and how to resolve disputes, until the final stage.

They met several times Thursday, but their final meeting at 10:15 pm lasted just five minutes, someone briefed on the schedule said. It's unclear where things stood after that point.

Each time talks with Canada have faltered, Trump has responded with personal attacks aimed at Trudeau and threatened to rip up the existing economic relationship between the two countries. But Canadians have expressed less shock each time he's done this, becoming more familiar with his negotiating tactics.

Trudeau, meanwhile, faces difficult decisions of his own. If he decides to pull back from negotiations until the U.S. offers significant concessions, he could risk putting his country in a spiraling brawl with the White House and the unpredictable U.S. president. Even if a number of GOP lawmakers have vowed to preserve Canada's status in the trade deal, Trump has not shown any sign of bending to congressional will.

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The Washington Post's Selena Ross in Montreal and Erica Werner in Washington contributed to this report.