On the campaign trail, Donald Trump called the North American Free Trade Agreement “the single worst trade deal ever approved in this country,” and he pledged to reverse it as president.
“A Trump administration will renegotiate NAFTA and if we don't get the deal we want, we will terminate NAFTA and get a much better deal for our workers and our companies. 100 percent,” Trump said at a Nov. 7 rally in Michigan.
Trump hasn’t said much about what specific changes he wants to make to NAFTA, except that he wants United States imports to be exempt from Mexico’s value-added tax and to end sweatshops there. So it’s hard to predict what might come of bringing Mexico and Canada back to the negotiating table.
WHY HE’S PROMISING IT
Trump’s pledge to renegotiate NAFTA is one reason Trump appealed to voters who have been negatively affected by the shrinking number of reliable manufacturing jobs in America over the past couple decades.
He hopes that renegotiating NAFTA would make American companies more likely to keep their factories in the United States instead of going to Mexico or other countries with cheap labor.
While some sectors of the manufacturing industry certainly took a hit from NAFTA and factories moving to Mexico, many independent analyses have found that the trade deal has had a modest effect on the American economy overall. It’s caused minimal economic growth and also minimal job loss.
WHAT’S STANDING IN HIS WAY
For any sort of reconfiguring of NAFTA to take place, Canada and Mexico would have to come to the table. Canadian and Mexican leaders have said they are open to talks but not necessarily renegotiation. If they do renegotiate, Mexico and Canada likely would have a list of things they’d want from the United States.
But if the renegotiation falls through, not much would stop Trump from pulling out of the trade agreement. NAFTA gives the president the power to take America out of the deal without Congress’ approval. He might, however, face political pressure and lawsuits from American businesses.
Some economists are worried that pulling out of NAFTA could do serious economic damage. Trump could spark a trade war — for example, if the United States raises tariffs on Mexico, it might retaliate with its own tariffs. Tariffs would make it more expensive to import products, meaning Americans likely would have to pay more for their goods.
Trump has said he would tackle this issue in his first 100 days. If he decides to pull out of the deal completely, he would have to give Mexico and Canada a six-month notice in writing.
Trump says provisions have slowed down NAFTA renegotiation
One of President Donald Trump's most popular economic promises was to renegotiate the North American Free Trade Agreement, which he saw as the "worst trade deal ever."
Trump said he would renegotiate the trade agreement among the United States, Canada and Mexico within his first 100 days in office. But formal talks still have not taken place.
Trump repeated his disdain for NAFTA during an April 18 visit to a manufacturing plant in Wisconsin. But he said logistics had delayed the process.
"The fact is NAFTA has been a disaster for the United States -- a complete and total disaster … Like, we wanted to start to negotiate with Mexico immediately, and we have these provisions where you have to wait long periods of time. You have to notify Congress. And after you notify Congress, you have to get certified. And then you can't speak to them for 100 days," Trump said.
Still, NAFTA is "very, very bad for our country" so changes will be made or the United States will pull out from the agreement, Trump added.
"Big things will be happening on trade with other countries over the coming months," he said.
Trump's Commerce Secretary Wilbur Ross in a March 8 Bloomberg interview said it would be "the latter part of this year before real renegotiations get underway."
In a March 10 joint press conference with Mexico's secretary of economy, Ildefonso Guajardo Villarreal, Ross said talks to change NAFTA were in the "very early stages" and that in the "next couple of weeks" he planned to notify Congress of the administration's intention to renegotiate NAFTA in 90 days.
As of April 13, renegotiation talks were still pending.
"Unfortunately, NAFTA negotiations cannot begin until Congress accepts our 90-day notification letter in compliance with the Trade Promotion Act," Ross wrote in a blog post.
In the March press conference, Guajardo said it would make sense to bring Canada to the table since it's a trilateral agreement and that Mexico would be ready to begin negotiations by the end of May, CNBC reported.
Trump and Canadian Prime Minister Justin Trudeau in a Feb. 13 joint press conference said they would discuss the trade deal in the future.
"When we sit down, as we did today and as our teams will be doing in the weeks and months to come, we will be talking about how we can continue to create good jobs for our citizens on both sides of the border," Trudeau said.
Trump said his concerns over NAFTA weren't tied as much to Canada as they were to Mexico.
"We have a very outstanding trade relationship with Canada. We'll be tweaking it," Trump said of the agreement. "We'll be doing certain things that are going to benefit both of our countries. It's a much less severe situation than what's taken place on the southern border."
Formal renegotiation of NAFTA will likely not begin during Trump's first 100 days in office, but his administration has said it's still pursuing the change in policy. We rate this promise In the Works.
Bloomberg, Nafta Talks Likely Won't Begin Until Later This Year, Ross Says, March 8, 2017
Reuters, U.S. hopes to launch NAFTA talks in just over 90 days: Ross, March 10, 2017