U.S. President Donald Trump hinted Thursday that he would not initiate a withdrawal from the North American Free Trade Agreement before July at the earliest.
His words provided some measure of reassurance to nervous NAFTA supporters.
The loonie and some U.S. stocks had dropped the day prior because of a news report, disputed with the Star by senior Canadian sources, that said Canada was increasingly convinced Trump would initiate the process of withdrawing, perhaps as soon as later this month.
Speaking to the Wall Street Journal on Thursday, Trump repeated his usual threat to withdraw from NAFTA if he could not negotiate improvements. But he added that he would be “leaving it a little bit flexible” until the Mexican presidential election on July 1.
“I understand that a lot of things are hard to negotiate prior to an election,” he told the Journal. “They have an election coming up fairly shortly. I understand that makes it a little bit difficult for them.”
“There’s no rush,” he added, saying he would “rather be able to negotiate” than begin a withdrawal.
Trump had never before expressed empathy for the political challenge faced by Mexican negotiators.
Trump offered a second mildly encouraging signal to trade proponents by telling the Journal that he could use a revised NAFTA to fulfill his promise to make Mexico pay for a wall on the border.
“We make a good deal on NAFTA, and, say, I’m going to take a small percentage of that money and it’s going toward the wall. Guess what? Mexico’s paying,” he said.
Observers were baffled by this claim.
Mexico’s Economy Secretary, Ildefonso Guajardo, wrote on Twitter, that Mexico “will never pay for that wall.”
Mexico’s chief negotiator, Kenneth Smith Ramos, wrote on Twitter: “Let this be clear: the issue of the payment for a #border #wall is not, and will never be, part of the #NAFTA #negotiations #wearenotjoking.”
Whether reasonable or nonsensical, however, the remark was the first in which Trump made an argument that suggested he was thinking of ways he could attempt to sell a decision to preserve a trade pact he has called the worst in world history.
“It’s a good sign,” said Ottawa trade lawyer Peter Clark of Grey, Clark, Shih and Associates. “It shows that he does listen . . . at least, he listened to the people he talked to yesterday. I don’t know who he’ll talk to tomorrow.”
Trump has been lobbied intensely in recent weeks by pro-NAFTA Republican senators. He spoke Monday at the pro-NAFTA American Farm Bureau, declining to offer reassurance but staying away from the most scathing of his regular anti-NAFTA remarks.
Trade experts have never assigned too much significance to any individual Trump remark on NAFTA, as the improvisational president often contradicts himself in subsequent appearances. Dan Ujczo, an Ohio trade lawyer at Dickinson Wright, said he was cautiously, but not overly, optimistic about Trump’s latest musings.
“I think some of the messages the president has been hearing from the farm lobby, from the pro-NAFTA-modernization forces, are starting to sink in,” said Ujczo.
Trump, Ujczo said, appears to be “weighing the costs and benefits of NAFTA withdrawal in a way that he hasn’t to date.”
Trump also criticized NAFTA to the Journal, calling it “a terrible agreement for us.”
But he said he would “rather leave it” than terminate it, and he said, “We’ve made a lot of headway. We’re moving along nicely.”
Canada is “prepared for every eventuality,” including a Trump decision to start the withdrawal clock Foreign Affairs Minister Chrystia Freeland said in London on Thursday.
A Trump decision to announce his intention to withdraw would not mean that an actual withdrawal would occur. Such a move would simply give the U.S. the right to withdraw in six months or beyond. It is not clear, moreover, whether Trump could actually withdraw without the approval of Congress.
Trump’s theory that it will be easier to negotiate with Mexico after its presidential election is not the consensus of experts. Mexicans could choose elect leftist populist candidate Andrés Manuel López Obrador, a NAFTA critic, albeit one who toned down his criticism in 2017.
Officials from all three countries have previously said that the best chance of reaching a deal is doing it early this year. Negotiations are not now scheduled beyond March.