(Adds comments from Mexico, Canada leaders, market reaction)
By Jeff Mason and Anthony Esposito
WASHINGTON/MEXICO CITY, Sept 25 (Reuters) - U.S. President Donald Trump warned on Wednesday that an impeachment inquiry against him could derail congressional approval of a North America trade pact, dragging down Mexico’s peso and stock market as investors fled riskier assets.
While U.S. Trade Representative Robert Lighthizer said he was confident the U.S-Mexico-Canada trade agreement (USMCA) would come up for a vote and pass, Trump told him in front of reporters that he knows “these people” better, referring to Democrats.
“I don’t think Nancy Pelosi will have time,” said Trump. “She’s wasting her time on a, you know let’s use a word that they used to use a lot: a ‘manufactured crisis.’”
Pelosi announced on Tuesday that Democrats in the House of Representatives had launched a formal impeachment inquiry into Trump, accusing him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year’s election.
“I don’t know whether or not they’re going to have time to do any deals,” Trump said. “I don’t think they can do any deals. You know, we were working on guns, gun safety.”
Canada, the United States and Mexico signed the agreement last year to replace the trillion-dollar North American Free Trade Agreement (NAFTA), and it must now be ratified.
Lighthizer later said was confident USMCA would come up for a vote because it is an extremely good agreement and “if it did not pass it would be a catastrophe for our economy.”
He said the legislation should be modified to address Democrats’ concerns, including reservations about the enforceability of the labor and environment provisions.
Mexican President Andres Manuel Lopez Obrador said the deal should be passed by the U.S. Congress quickly, not left until closer to the November 2020 U.S. presidential election.
“It’s better if this gets resolved soon. It’s in the interest of all three nations,” Lopez Obrador told journalists at a daily media briefing.
Canadian Prime Minister Justin Trudeau said, “We’ve always been focused on the ratification of the USMCA in a way that tries to go beyond the partisan differences in the United States.”
“Our focus remains on ensuring that this deal ... goes forward and that’s what we are going to remain focused on,” said Trudeau.
Mexico’s peso slipped as much as 0.9% versus the dollar to an almost three-week low, and the benchmark Mexican stock index fell as much 1.24%, with banks citing the impeachment inquiry as sapping investor appetite for risk. Both the peso and stock index recovered slightly in later trading.
The Canadian dollar has been little changed at about 1.3260 to the U.S. dollar, or 75.41 U.S. cents since the launch of a formal impeachment inquiry. The Toronto stock market has fallen about 0.7% since Monday as lower oil prices weighed on energy stocks.
Capital Alpha Partners said it lowered its estimated likelihood of passage for USMCA to 30%. “USMCA is on life support,” said James Lucier, analyst for the firm. (Reporting by Jeff Mason; Writing by Mary Milliken and Anthony Espisito; Additional reporting by Andrea Shalal in Washington; David Ljunggren in Delta, British Columbia, Fergal Smith in Toronto, and Miguel Angel Lopez in Mexico City; Editing by Tom Brown and Cynthia Osterman)