Mexico is ready to agree to virtually all of the United States' auto demands, said sources with knowledge of the closed-door talks in Washington, in a bid to drive NAFTA talks forward.
And one source familiar with the negotiations said U.S Trade Representative Bob Lighthizer will not go easy when Canada joins the talks again.
American and Mexican industry sources said Mexico is close to accepting a key USA demand that between 40 per cent and 45 per cent of the content of all vehicles manufactured in the NAFTA zone come from factories paying at least US$16 an hour.
Guajardo on Thursday said his team was working hard to strike a deal with the United States on new rules for the auto industry, which could pave the way for Canada to rejoin talks to revamp the North American Free Trade Agreement.
"New President of Mexico has been an absolute gentleman", tweeted Trump, who also wrote that autoworkers and farmers "must be taken care of or there will be no deal".
"Canada must wait", Trump added. He says the country's "Tariffs and Trade Barriers are far too high" and is threatening to "tax cars if we can't make a deal!"
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Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, who is leading NAFTA trade talks for Canada, said the minister was in regular contact with her Mexican and USA counterparts. "Will tax cars if we can't make a deal!" "We'll keep standing up for Canadian interests as we work toward a modernized trilateral NAFTA agreement".
Mexican Economy Minister Ildefonso Guajardo said his country and the USA have been making a lot of progress, but would be back in Washington next week for a fourth week of two-way talks.
Asked about progress on autos rules of origin, he said: "Nothing is close until everything is close, but there are items in every element that is being discussed". Current sessions have mostly focused on resolving U.S.
Should that continue, Canada could end up pressured into accepting deals reached by the other two when it finally returns to the fold, he said. He said this could take place in "the next few days or weeks".
In response, Canadian officials announced "dollar for dollar" retaliatory tariffs, as Prime Minister Justin Trudeau called them at the time, to the tune of over C$16 billion in USA imports. Trump has made this threat on several occasions and those in the industry have expressed concern about the impact that could have throughout North America.