President Trump told the leaders of Canada and Mexico on Wednesday that the United States would not be pulling out of the North American Free Trade Agreement “at this time,” opening the door to future negotiations on the same day that Trump was considering signaling a strong intent to withdraw as a potential way of bringing the parties to the dealmaking table.
But Trump said NAFTA’s three-nation partnership could still hang in the balance if the talks do not produce “a fair deal for all.”
“If we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good — deal very possible!” Trump wrote in a tweet posted early Thursday.
Trump spoke with Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau late Wednesday afternoon after reports circulated during the day that the president was contemplating withdrawing from NAFTA.
“President Trump 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,” the White House said in a statement late Wednesday.
News that Trump was weighing withdrawing from NAFTA drew sharp criticism from several Republican leaders, including Sen. Jeff Flake (R) and Sen. John McCain (R). McCain tweeted that Trump “shouldn’t abandon this vital trade agreement.”
Earlier, three people familiar with the matter said Trump is seriously considering signing a document within days that would signal his intent to withdraw the United States from the agreement within six months.
If signed, the letter would begin a formal process that could see the United States exit the 23-year-old trade pact with Canada and Mexico, ratcheting up tensions among neighboring nations.
Signing the document does not require Trump to withdraw from NAFTA after six months, but it is a required step if he plans to eventually do so. The White House is expected to soon take a separate step by signing a letter to Congress that would notify lawmakers of the administration’s intention to renegotiate NAFTA. By taking both steps, the White House would give itself more flexibility to choose a different outcome in several months.
Any move by Trump on NAFTA would not come as a surprise. The president made criticism of NAFTA one of the main topics of his campaign last year, calling the pact “a disaster for our country” and saying it “had to be totally gotten rid of.”
But the NAFTA issue did seem to lose some urgency after the first few weeks of Trump’s presidency as his administration focused on other topics.
“Some people were hopeful that just like he revised his views on NATO, he’d revise his views on this,” said Hoyt Bleakley, associate professor of economics at the University of Michigan. “But clearly he hasn’t.”
In recent days Trump also has taken a harder line with Canada, blasting a recent change in the dairy pricing policy there that mostly dealt with a cheese-making product called ultrafiltered milk. In Wisconsin last week, Trump called Canada’s dairy pricing scheme “another typical one-sided deal against the U.S.” Canada disputed that.
And the Commerce Department said Monday that it would begin charging a tariff on the import of softwood lumber from Canada into the United States, alleging Canada was improperly subsidizing its domestic timber firms.
But there was no panic over the fate of NAFTA in the Calgary offices of the Canadian Cattlemen’s Association, whose members sell and buy plenty of beef cattle across the border.
“This is his typical way of doing things — saying completely unreasonable things as a negotiating posture,” said John Masswohl, the trade group’s director of government and international relations.
Masswohl said he watched how Trump handled issues at the Carrier plant in Indiana and with Ford’s plans to build car models in Mexico. He sees similar rhetoric in Trump’s approach to NAFTA.
“I’ve got to believe this is a negotiating position,” Masswohl said, because the trade pact might need tweaking, but it has been good for both countries.
Separately, the Trump administration Wednesday made another move on trade that seemed aimed at China, launching an investigation into the effect of aluminum imports on U.S. national security interests.
A similar probe, known as a Section 232 investigation, was announced for foreign-made steel last week.
Commerce Secretary Wilbur Ross said Wednesday that Trump would be signing a directive today urging the inquiry.
Ross said aluminum was a national security interest because the metal in its high-purity form is used in military planes such as the F-35 and F-18, plus armor plating for military vehicles and combat vessels. Just one U.S. smelter makes high-purity aluminum, producing enough for peacetime military needs but not enough if the country enters into conflicts, he said.
“It’s very dangerous from a defense point of view to have only one supplier of an absolutely critical element,” Ross said.
Only two U.S. smelters are fully operational today, with eight others having curtailed operations or closed since 2015. Imported aluminum accounted for 55 percent of the U.S. market last year, the largest market share ever and a steep increase over recent years, Ross said.
The largest importers of aluminum into the United States are China followed by Russia, United Arab Emirates and Canada, Ross said.
Aluminum imports from China, in particular, have been a focus of the U.S. government for months. Late last year, a bipartisan group of 12 U.S. senators asked for a national security review of Chinese aluminum giant Zhongwang International Group Ltd.’s proposed $2.3 billion purchase of U.S. aluminum products maker Aleris, alleging the deal would damage the U.S. defense industry.
In January, days before leaving office, President Barack Obama launched a World Trade Organization complaint about Chinese aluminum subsidies that, the United States claimed, gave Chinese companies an unfair advantage.
And last month, U.S. producers of aluminum foil — including the kind used to wrap kitchen leftovers — filed an anti-dumping complaint against China, claiming the United States was being flooded with unfair, cheap imports. Foil prices have declined significantly in recent years “due to widespread and significant underselling of U.S. producers’ prices,” according to the complaint.
A couple of weeks later, Trump’s Commerce Department announced that it was investigating those and other unfair trade claims.