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Trump Promises NAFTA “Surprises” at Latest CEO Shindig

Companies are still nervously awaiting the president’s plans for decades-old agreement, which could involve raising tariffs on imports.

President Trump meeting with CEOs, April 11, 2017

CEOs have had another chance to sway the president’s agenda, though his pledge to have “some very pleasant surprises for you” on the North American Free Trade Agreement may not have gone as well as intended.

Around 20 business leaders met with the president yesterday for several hours, at one point breaking into five groups that each spent time workshopping ideas with high-ranking cabinet officials.

The meeting was the next installment of the president’s economic advisory council, which is chaired by Blackstone CEO Stephen Schwarzman. It wasn’t entirely clear if everyone on the original list attended this time around.

BlackRock’s Larry Fink, GM’s Mary Barra, Pepsi’s Indra Nooyi, Walmart’s Doug McMillon and ex-Boeing CEO Jim McNerney were among attendees, according to a White House transcript of the event.

“YOU CAN GET THERE BY THE OTHER PEOPLE REDUCING OR YOU INCREASING. RIGHT NOW THE PLAYING FIELD IS NOT NECESSARILY LEVEL IN EVERY CASE.”

Once again, the president mentioned tax cuts, a reduction in regulations and infrastructure spending, without being particularly specific—though he did claim that his regulation-trimming efforts were already around 25% done. A comment about NAFTA stood out, at least in his publicly-released remarks.

“NAFTA is a disaster,” Trump said. “It’s been a disaster from the day it was devised. And we’re going to have some very pleasant surprises for you on NAFTA, that I can tell you.”

How pleasant those surprises are depends on whether they’ll represent a lighter or heavier crackdown on free trade than expected—and how much the respective CEOs in the room support free trade with Mexico and Canada.

Business leaders have broadly backed Trump’s approach to tax and regulations, though many are concerned that protectionist policies could hurt the economy. And they’re already bracing for substantial changes.

Last month, a leaked draft of the administration’s plans for NAFTA indicated it would attempt to allow the U.S. to raise tariffs on Mexican and Canadian goods, should they be perceived as causing a serious threat to U.S. companies. The draft also mentioned plans to force the government to give preference to American companies when tendering for work. Press Secretary Sean Spicer said the document was only a draft and didn’t reflect actual White House policy.

The administration is eager to trigger a 90-day notice period with Congress that must precede NAFTA negations, but progress has been held up as Democrats slow-walk the appointment of Robert Lighthizer as Trump’s trade representative.

Schwarzman said in January that Canada “should not be worried” about the renegotiations and that it was unlikely its vast energy exports would face new taxes. What the re-negotiation means for Mexico is another matter.

After yesterday’s meeting, Schwarzman was upbeat, suggesting that trade-war fears appeared to be easing. The Trump administration is basically trying to achieve “reciprocity” on trade, so that America isn’t paying higher tariffs to export to a country that it charges lower tariffs to, he said.

“You can get there by the other people reducing, or you increasing,” he told Bloomberg after the meeting. “Right now the playing field is not necessarily level in every case.”

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About Ross Kelly

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.