US President Donald Trump said on Thursday that renegotiating the North American Free Trade Agreement with neighbouring Canada and Mexico was “very possible,” but he threatened to scrap the pact if the countries failed to reach a “fair deal for all.”
“I received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate Nafta rather than terminate,” Trump wrote on Twitter. “I agreed … subject to the fact that if we do not reach a fair deal for all, we will then terminate Nafta. Relationships are good – deal very possible!”
Trump has repeatedly vowed to pull out from the 23-year-old trade pact if he cannot renegotiate better terms for the United States, which went from running a small trade surplus with Mexico in the early 1990s to a $63 billion deficit in 2016.
Trump’s comments came one day after he told the leaders of Canada and Mexico that he would not end the trade agreement now. White House officials had earlier said the administration was considering efforts to withdraw.
On Wednesday, the White House said Trump had spoken with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau and agreed not to terminate Nafta at this time. “The leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries,” it added.
The three North American countries form one of the world’s biggest trading blocs, and disruptions among them could wreak havoc in the auto, agricultural and other industries.
The Mexican and Canadian currencies maintained their rebound early on Thursday after Trump’s latest comments. The US dollar dropped nearly 0.3 per cent against its Canadian counterpart and about 1 per cent against the peso.
US Commerce Secretary Wilbur Ross told CNBC on Thursday that numerous “conceptual flaws” in the treaty needed to be addressed.
“Nafta needs tightening,” Ross said, adding that more should be done to ensure that participants in the bloc have a trade advantage over other countries.