President Trump is considering notifying Canada and Mexico that he is starting the process to withdraw the United States from the three nations' North American Free Trade Agreement, three people familiar with the process said.
Trump has not made a final decision, but if he were to sign the executive action notifying the two nations, it would begin a 6-month process to begin withdrawal. The notification would not require Trump to ultimately withdraw, but it is a required step if he plans to eventually exit the 23-year-old trade pact.
The sources said Trump had not made a final decision on the notification, but it could come within days.
Trump, who frequently criticized NAFTA during his campaign, is also expected to pursue a parallel track, in which he issues a separate order notifying Congress of his intent to renegotiate the free-trade agreement. By signing an intent to renegotiate and an intent to withdraw, the White House can attempt to leverage new concessions from Mexico and Canada while still maintaining a credible threat to leave the agreement entirely.
Exiting NAFTA would be a major break from decades of U.S. trade policy, and it's unclear whether the order would be a serious threat to leave the pact or simply an effort to put the country's neighbors on notice that Trump intends to rewrite the rules of North American trade.
Even threatening to withdraw from NAFTA could heighten tensions with Mexico and Canada, close allies and trading partners.
Trump railed against Mexico repeatedly during his campaign, saying that its trade practices are ripping off U.S. workers and luring away U.S. jobs -- adding to tensions over Trump's proposed border wall and his remarks about Mexican immigrants.
In recent days, however, he has taken a harder line with Canada, blasting a recent change in the dairy pricing policy there. And Monday, the Commerce Department said 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.
Reaction to news of the potential notification was swift on Wednesday, with several Republicans whose states border Mexico warning Trump to rethink the move.
— John McCain (@SenJohnMcCain) April 26, 2017
Similarly, Senate Majority Whip John Cornyn (R-Tex.) expressed surprise after being informed of the potential executive action. He said it is "not consistent with" assurances he has gotten from Commerce Secretary Wilbur Ross. Ross, Cornyn said, had said the administration's goal is to "update" the treaty, not withdraw from it.
"We better be careful about unintended consequences," said Cornyn, whose home state economy could be hurt by withdrawing from the treaty. He also speculated that this may all be just a "negotiating tactic" on Trump's part.
A number of Democrats attacked Trump's potential move as well. Rep. Richard Neal of Massachusetts, the top Democrat on the House Ways and Means Committee, said signing an executive order signaling intent to withdraw from NAFTA "would create incredible uncertainty and hinder our ability to create jobs here in America." He said he voted against the trade agreement in the 1990s "but threatening to withdraw from NAFTA even before negotiations begin to fix the trade agreement won’t give us more leverage."