His decision to hold back is a win for business concerned that increased tariffs on the Mexican and Canadian borders would dramatically increase the cost of delivering goods and services, including automobiles and fossil fuels. Earlier this month, Donald Trump reneged on his earlier claim that China was a currency manipulator, while telling CEOs to expect “pleasant surprises” on NAFTA.
The policy u-turns come as CEOs who have attended Trump’s summits in New York, Washington and Florida indicate that he’s listening to their policy advice, which would no doubt include urging him to avoid trade wars with the likes of China and Mexico.
Trump said on Twitter this morning that he had received calls from Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau asking to renegotiate rather than terminate NAFTA. “I agreed,” he said, while later adding: ” … subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good—deal very possible!”
Trading in the Mexican peso was volatile yesterday as some news reports suggested more protectionist forces in the administration were pushing Trump to issue an order declaring America’s withdrawal from the pact, established in 1994.
Ford CEO Mark Fields, who sits on Trump’s manufacturing council, is among leaders who have continued to tout the benefits of NAFTA, which he said supports American jobs. Fiat Chrysler’s Sergio Marchionne has said withdrawing from the treaty would have “monumental consequences” for the auto industry, while the likes of Berkshire Hathaway CEO Warren Buffett and FedEx’s Fred Smith have urged the president to keep trade ties open.
Blackstone CEO Stephen Schwarzman, who chairs Trump’s economic advisory council, said in January that Canada “should not be worried” about trade negotiations and that it was unlikely its vast energy exports would face new taxes. Yet, the administration this week slapped tariffs as high as 24% on Canadian lumber imports, indicating upcoming trade renegotiation won’t necessarily be smooth.