On the back of reports that U.S. President Donald Trump was poised to sign an executive order to withdraw the U.S. from North American Free Trade Agreement, NAFTA, the president will now look to renegotiate the trade deal after speaking the leaders of Mexico and Canada.
A White House statement from Wednesday night said that after speaking via phone to Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto, Trump had "agreed not to terminate NAFTA at this time and 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."
"I received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate NAFTA rather than terminate. I agreed.. ," Trump tweeted early Thursday morning.
"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!" he continued.
On Wednesday, reports were circulating that Trump was preparing an executive order to remove the U.S. from the trade deal which has been in place since 1994 to lower tariffs between the three countries.
A senior administration official emphasized that the U.S. withdrawal from the NAFTA is something President Trump has "always been considering." During his presidential campaign, Trump often berated NAFTA as a "bad deal" promising to either renegotiate the terms of the agreement or withdraw from it altogether
Reports claimed that an executive order was drafted by Trump's chief strategist, Steve Bannon and Director of the White House Trade Council Peter Navarro and could be signed as early as this week. U.S. Congress requires 90 days notice before NAFTA talks for renegotiations to start.
In recent months Trump has referred to NAFTA as a "disaster" and has contended that the trade agreement has resulted in the loss of millions of U.S. manufacturing jobs, while continually pushing his “Buy American and Hire American” platform to increase the purchase of manufacturing jobs.
However, a host of Republicans have urged Trump not to pull out of the deal. "It will devastate the economy in my state. I hope he doesn't do that," said Sen. John McCain Wednesday.
While Trump may be under pressure to make good on his campaign promise, a promise he'd pledged to fulfill before his first 100 days in office, Mexican leaders are anxious to finalize NAFTA negotiations well before the country's July 2018 presidential election.
Term limits restrict Mexican President Enrique Peña Nieto from running again and there's no guarantee that the next president will cooperate with the Trump administration on trade issues. The U.S. remains Mexico’s biggest trading partner, which buys around 80 percent of Mexico’s exports.
Mexico too has signaled its intent to leave NAFTA if renegotiations go against its interests and already appears to be contemplating a post-NAFTA economy by scoping out other trade deals across Latin America. Despite Trump's claims that "relationships are good," this issue of Trump's proposed border wall with Mexico – another election promise, continues to sour relations between the Mexico and the U.S.
"I love Canda," Trump said at the White House while signing an executive order for U.S. agriculture to cut back U.S. regulations but also impose tariffs on lumber and dairy imports from Canada.
"People don’t realize Canada’s been very rough on the United States. Everyone thinks of Canada being wonderful and civil ... But they’ve outsmarted our politicians for many years, and you people understand that,” he told the audience of farmers and agriculture experts.
Canada's Foreign Minister Chrystia Freeland told CNN Tuesday, "We are ready to come to the table anytime, but the United States, in fact, has yet to actually initiate the negotiating process."
The Mexican Peso and the Canadian Dollar strengthened following the news that the NAFTA deal would remain intact, at least for the time being.