In preparing to renegotiate the North American Free Trade Agreement 23 years after it was enacted, the White House was prepared to withdraw the United States from the trade pact between the U.S., Mexico and Canada, according to White House sources on Wednesday, if President Trump could not get a better deal for America.
Wednesday evening, however, the White House released a statement saying President Trump had told both Canada and Mexico that he will not terminate the NAFTA agreement, but will renegotiate it instead.
The president spoke with both Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto by telephone Wednesday, and both leaders reportedly agreed to proceed with a renegotiation of the deal “to the benefit of all three countries.”
President Trump stated, “It is my privilege to bring NAFTA up to date through renegotiation. It is an honor to deal with both President Peña Nieto and Prime Minister Trudeau, and I believe that the end result will make all three countries stronger and better.”
The possibility that the U.S. may cut its ties with NAFTA negatively affected stocks and currencies in Mexico and Canada, according to Reuters.
“It is a clear indication that they (in the White House) are wanting changes but we will have to see what emerges,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.
A longtime critic of NAFTA, Trump has said that Mexico is responsible for destroying U.S. jobs and recently dressed down Canada’s protection of its dairy industry, calling it “unfair.”
Trump placed 20 percent tariffs on Canadian imports of softwood lumber this week, making it clear that he means business.
On Jan. 23, he pulled the U.S. out of the Trans-Pacific Partnership trade deal, and considering the fact that the country went from running a small trade surplus with Mexico in the early 1990s to a $63 billion deficit in 2016, he’s clearly prepared to pull out of NAFTA.
“At this moment NAFTA negotiations have not started,” said Alex Lawrence, a spokesman for Canada’s Foreign Minister, Chrystia Freeland, before the phone call. “Canada is ready to come to the table at any time.”
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