Trump appears to be moving toward terminating NAFTA

(Image credit: Jim Watson/AFP/Getty Images)

last updated 12 October 2017

As a fourth round of negotiations on the North American Free Trade Agreement commenced outside Washington, D.C., on Wednesday, President Trump hosted Canadian Prime Minister Justin Trudeau and said he's still considering killing the 23-year-old free trade pact. "I've been opposed to NAFTA for a long time, in terms of the fairness of NAFTA," Trump said. "I think Justin understands that if we can't make a deal, it will be terminated and that will be fine. ... We have a tough negotiation, and it's something you will know in the not too distant future." He suggested bilateral deals with Mexico and Canada would be better for America.

Trudeau said later that he's optimistic about NAFTA's prospect but Canada must be "ready for anything." The U.S. Chamber of Commerce is much less sanguine — in Mexico City, its president, Tom Donahue, said it's time to "ring the alarm bells" on NAFTA. "Let me be forceful and direct," he said. "There are several poison pill proposals still on the table that could doom the entire deal," and its failure would pose an "existential threat" to North America's national and economic security. On Monday, more than 310 state and local chambers of Congress urged Trump to stay in NAFTA.

If NAFTA is jettisoned, tariffs would go up on all products, and while the tax would be relatively low overall, U.S. agriculture would be hit especially hard, and U.S. automakers would have to rework their entire supply chains. Trump, a longtime critic of NAFTA, told Forbes this week, "I happen to think that NAFTA will have to be terminated if we're going to make it good." Trade advisers to former Presidents Barack Obama and George W. Bush told The New York Times they think Trump's nonstarter demands for Canada and Mexico are a pretext for killing NAFTA.