How President Trump Would Rework NAFTA — and What Mexico and Canada Would Want in Return

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President Donald Trump put neighboring Canada and Mexico on notice: he’s determined to wring out more favorable terms from Nafta. Now comes the hard part of reworking a trade deal that’s framed relations for more than two decades.

Trump’s plan to re-negotiate the North American Free Trade Agreement was received in Mexico with a call to protect tariff-free trading, while in Canada officials seemed more worried about avoiding unintentional damage to the economy as the U.S. targets Mexico. The U.S. president has broad powers to implement trade policies. While Trump has given few details about exactly what he’s seeking from a Nafta re-think, it could be a long and potentially messy process.

Trump, who was sworn in Friday, has already spoken to Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto about his objective to re-negotiate Nafta, which he’s routinely blamed for the loss of U.S. jobs and called “the worst trade deal in the history of this country.”

White House spokesman Sean Spicer on Monday said Trump plans further talks about modifying Nafta at meetings with the two leaders in the next 30 days. How discussions unfold will determine the way forward, including if piecemeal reforms are possible or it will require starting over, Spicer told reporters in Washington.

If Trudeau and Pena Nieto “come in and express a willingness to do that, you could negotiate it within the current parameters, and update it through the existing structure,” Spicer said. “If they don’t, and he decides to pull out, then we would have to go back to the drawing table in the future.”

Canada’s strategy, at this stage, seems to be to get out of the way. Canadian officials are holding out hope they’re not Trump’s target, and will do everything they can to make sure they don’t get sideswiped if the president goes after Mexico.

On his first post-inauguration call with Trump on Saturday, Trudeau reminded the president that Canada is the top buyer of U.S. goods overall and the top buyer for 35 individual states. Trudeau has also assured Trump that Canada won’t be one of the 1,000 problems he’ll deal with daily. Canada nonetheless expects Trump to pursue large-scale Nafta changes, according to a person familiar with the talks so far.

Canada shouldn’t be “enormously worried” because it’s held in high esteem and two-way trade is balanced, Stephen Schwarzman, chief executive officer of Blackstone Group LP and a Trump adviser told reporters on Monday after speaking to Canada’s cabinet at a retreat in Calgary.

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SOURCE: Theophilos Argitis, Eric Martin, and Saleha Mohsin
Bloomberg