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Illustration: Lazaro Gamio/Axios

The U.S. could well have a new trade deal by tomorrow, and a trade war of staggering proportions by next week.

The big picture: President Trump has been fighting on three fronts — contentious NAFTA negotiations, tariffs on allies in Europe and Asia with the threat of more to come, and a multi-pronged standoff with Beijing. The China dispute pits the world’s two largest economies against one another, and has by far the greatest stakes for the global economy.

  • Gary Hufbauer of the Peterson Institute tells Axios that if Trump imposes fresh tariffs on $200b in Chinese goods, as Bloomberg reports he plans to as early as next week, “that will trigger a trade war with huge financial repercussions, because China will not back down.”
  • Axios contributor Bill Bishop, who recently returned from Beijing, writes: “I consistently heard that Chinese President Xi Jinping and his advisers had decided U.S. trade pressure is just one piece of a multi-dimensional strategy to ‘thwart China’s rise,’ and so it made little sense to them to offer significant concessions.”
  • Axios’ Jonathan Swan says Trump sees this as a winning issue and is not about to change course: “He believes in this. It’s like theology to him."

On NAFTA, Trump has reached a preliminary deal with Mexico, and wants Canada to come aboard by Friday so the agreement can be finalized before a new leftist government takes office in Mexico City.Where things stand: Swan is hearing some confidence in the White House and doubts on Capitol Hill, while Canadian leaders have expressed cautious optimism. It would be a remarkable turn of events to see Canada, sidelined in the talks and anxious to stand up to Trump, come around so fast.

  • Remaining sticking points include Canada’s protectionist policies on dairy and a controversial system for handling investor disputes. The U.S. has backed off nearly all its most hardline proposals.
  • All that's really needed tomorrow is a three-way handshake. The parties would then have 30 days to iron out the details and keep the process moving toward a potential ratification vote next year.
  • Behind the scenes: Swan reports that Trump is under pressure from Republican senators to get a deal — any deal — to show progress is being made. The senators, particularly those from farm states, feel Republican voters are willing to give Trump the benefit of the doubt for now, but are growing nervous.

Meanwhile, Trump today rejected an EU offer to bring all auto tariffs down to zero. The new auto tariffs he's threatening would hit Europe and Japan hard and, according to an analysis from the Peterson Institute, could cause 624,000 U.S. workers to lose their jobs and car prices to spike.

  • Trump wants to move ahead on auto tariffs but is facing strong resistance within his administration and from the Hill, Swan reports. One GOP senator told Axios “the dam would break” in Congress if Trump pulled the trigger. The senator has expressed that to Trump.
  • The fallout here would be orders of magnitude larger than what we saw over metals tariffs. “Neither Europe or Japan is going to roll over on autos the way Mexico basically has,” Hufbauer says.

Trump's view: “The European Union is almost as bad as China, just smaller."

Go deeper

Complaint to FTC: Amazon search results full of potentially deceiving ads

Photo: Nigel Kirby/Loop Images/Universal Images Group via Getty Images

Amazon does not sufficiently distinguish between its search results and paid ads, potentially "deceiving millions of consumers," according to a complaint filed to the Federal Trade Commission.

Why it matters: Joan Moriarty, research director for the Strategic Organizing Center, a coalition of labor unions that filed the complaint, told the Washington Post the group is "very hopeful" that the FTC will investigate the complaint because Lina Khan (D), a known Amazon critic, is now chair.

3 hours ago - Health

Pfizer-BioNTech: Booster doses more effective at blocking Omicron

Prepared doses of the BioNtech-Pfizer Covid-19 coronavirus vaccine in Germany on Dec. 7. Photo: Thomas Kienzle/AFP via Getty Images

Pfizer and BioNTech said Wednesday that two doses of their COVID-19 vaccine were significantly less effective at neutralizing the Omicron variant in early lab tests, but a three-dose regimen was more effective.

Why it matters: Omicron, which has been labeled a variant of concern by the World Health Organization after being identified by scientists in South Africa last month, has forced vaccine makers to reassess the effectiveness of their vaccines against this specific new form of coronavirus.

Mike Allen, author of AM
3 hours ago - Politics & Policy

Biden unveils "Building a Better America" branding

President Biden speaks on infrastructure while visiting a bridge in Woodstock, N.H., last month. Photo: John Tully/Getty Images

President Biden today launched a new website and unveiled bold new branding as part of a nationwide tour to sell the benefits of his infrastructure package.

Why it matters: The White House says passage of the new law shows the ability to "forge bipartisan consensus and prove our democracy can deliver big wins" even in these toxic times.