WASHINGTON ― President Donald Trump said Thursday that he was on the verge of withdrawing the United States from the North American Free Trade Agreement until the leaders of Mexico and Canada talked him out of it.
“I was going to terminate NAFTA as of two or three days from now,” Trump said at the White House.
But then, Trump said, he got phone calls from the leaders of Canada and Mexico, two men he likes very much.
“They called me and they said, rather than terminating NAFTA, could you please renegotiate?” Trump said. “I respect their countries very much. The relationship is very special and I said I will hold on the termination, let’s see if we can make it a fair deal.”
The announcement seemed to mark an abrupt turn of events from the previous day, when Trump was seriously considering giving the two North American nations notice that he planned to withdraw from the free trade agreement, according to multiple reports.
The reports, attributed to White House officials, prompted Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau to call Trump.
With the 100-day mark of his presidency looming this Saturday, Trump has announced a number of trade policy initiatives aimed at fulfilling campaign promises to reduce the United States’ global trade deficit. In perhaps its most concrete measure to date, the White House imposed a 20 percent tariff on Canadian softwood lumber Monday as part of a long-standing dispute in which the U.S. has claimed the Canadian government illegally subsidizes its lumber industry.
Trump has also fumed about Canada’s recent decision to tax U.S. exports of ultrafiltered milk, vowing to resolve the issue on behalf of American dairy farmers. And the administration has opened investigations into whether the volume of steel and aluminum imports represents a threat to national security (the argument is that the U.S. might not be able to make enough military equipment if its manufacturing base is too small). Experts believe the administration has the authority to use those investigations to limit foreign goods.
Scott Paul, president of the Alliance for American Manufacturing, a trade group supported by steel companies and the United Steelworkers Union, said the administration seems to be trying multiple negotiating strategies at once.
“I think that the administration is trying to figure out how to gain the most leverage in NAFTA talks,” Paul said. “Whether it’s to threaten, whether it’s to take a hard line on trade enforcement actions, or the kind of conciliatory phone calls where we’re your friend, or threaten to set the timer, which is what the withdrawal would have done.”
Even if Trump’s threat to withdraw and his abrupt about-face were intended as a hardball tactic to elicit concessions, it is unlikely to have that effect, according to Dean Baker, co-director of the Center for Economic and Policy Research.
“I don’t think of it necessarily as hardball, because I don’t think it is well-thought-out strategy,” Baker said. “This looks like he doesn’t know what he’s doing. That’s what it looks like to me, and it probably looks the same way to Canada and Mexico.”
Trump has not made clear how or when he plans to reshape NAFTA, beyond repeating that absent a better deal for the United States, he would withdraw from the treaty entirely. Since the campaign, he’s been saying the same thing he said on Thursday ― that he’ll withdraw without a better deal.
Trump would have to notify Congress 90 days in advance of reopening NAFTA negotiations. He is also required to inform Canada and Mexico six months ahead of time if he plans to pull out of the agreement.
Economists generally credit NAFTA with improving economic growth since it took effect in 1994, though experts say it has had a negative effect on some blue-collar workers forced to compete with cheaper labor in Mexico. During his presidential campaign, Trump held up NAFTA as a symbol of all that is wrong with Washington, with elite politicians selling out working Americans.
By 2010, NAFTA had cost the United States 682,000 jobs, most of them in manufacturing, according to an analysis by the Economic Policy Institute, a progressive think tank that gets funding from labor unions.
“It’s been very good for Canada, it’s been very good for Mexico, but it’s been horrible for the United States,” Trump said Thursday. “So they asked me to renegotiate. I will, and I think we’ll be successful in the renegotiation. Which frankly will be good because it’ll be simpler. So I decided rather than terminating NAFTA, which would be a pretty big, you know, shock to the system, we will renegotiate.”
This story has been updated with comments from Baker.