President Trump was planning this week on announcing an executive order that would begin the process of withdrawing from the North American Free Trade Agreement (NAFTA). It was reported that he would announce the executive order during a rally tomorrow in Harrisburg, Pennsylvania, marketing his 100th day in office.
However, once that news was out, it caused somewhat of a firestorm. The president of Mexico and the prime minister of Canada both called Trump, warning him against such a precipitous step. Trump later responded by telling reporters yesterday that has had been persuaded by their phones calls and will now focus on reworking NAFTA, rather than terminating the trade agreement. But, “if we do not reach a fair deal for all, we will then terminate NAFTA,” Trump said.
Mexico’s Pena Nieto told Trump that he shared a desire to begin trade negotiations as soon as possible but also emphasized that he was “looking for a negotiation that is good for Mexico, a win-win.” The call from Mexico was followed by one from Canada’s Prime Minister Justin Trudeau, who urged Trump to focus on negotiations. Ending NAFTA would cause “a lot of short- and medium-term pain for an awful lot of families” on both sides of the border, Trudeau reportedly told Trump.
The issues surrounding NAFTA were a big part of the presidential campaign with Trump promising often that he would either renegotiate NAFTA or withdraw from it entirely. Such talk resonated deeply in economically struggling parts of the country and helped to get him elected.
American farmers sold $2.6 billion of corn to Mexico last year, and American agricultural exports to Mexico have increased 64 percent over the last decade. Under NAFTA, Mexico cannot charge tariffs on those imports, but if NAFTA were to be terminated, Mexico could immediately restore a 37-percent tariff on American corn. As news of the potential executive order circulated, corn futures dropped 1.3 percent.
