Trump says U.S. will renegotiate trade pact with Canada, Mexico

By Ayesha Rascoe and David Lawder

WASHINGTON (Reuters) – President Donald Trump said on Thursday he pulled back from the brink of killing the 23-year-old trade pact with Canada and Mexico after requests from their leaders and expressed optimism about winning better U.S. terms in a renegotiated deal.

Trump, during a White House appearance with Argentine President Mauricio Macri, said terminating the North American Free Trade Agreement, a pact he has long condemned as unfair to the United States, “would be a pretty big shock to the system,” though he had been planning to do so within two or three days.

Hours after White House officials disclosed on Wednesday that Trump and his advisers had been considering an executive order to withdraw from NAFTA, he said he received telephone calls from Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau.

“They asked me to renegotiate. I will,” Trump said. “And I think we’ll be successful in the renegotiation, which frankly would be good because it would be simpler” than killing NAFTA.

Trudeau said he had warned Trump of the disruption that pulling out of NAFTA would cause. Mexico’s foreign minister said a good outcome for all three countries was possible under a new accord.

News of the possible U.S. pullout from NAFTA rattled financial markets on Wednesday. Relative calm returned on Thursday after Trump’s comments, and the Mexican peso strengthened 0.86 percent against the U.S. dollar while the Canadian dollar was flat versus the greenback.

Mexico, Canada and the United States form one of the world’s biggest trading blocs, and trade disruptions among them could adversely affect agricultural, automotive, energy and other sectors in all three countries. NAFTA erased most trade and tariff barriers between the neighbors, but Trump and other critics have blamed it for deep U.S. job cuts.

Trump campaigned for president last year on a pledge to pull out of NAFTA if he could not renegotiate better terms. The United States went from running a small goods trade surplus with Mexico in the early 1990s to a $63-billion deficit in 2016. On Thursday he said NAFTA had been “horrible” for the United States but very good for Canada and Mexico.

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