Trump Wants to Target Free Trade from Day One
Donald Trump intends to renegotiate or initiate a procedure to withdraw from the North American Free Trade Agreement (NAFTA) on the first day of his presidency, CNN reported. The Trump transition team has produced a document, outlining the agenda for the new U.S. president’s first 200 days. (Source: “Trump transition memo: Trade reform begins Day 1,” CNN, November 16, 2016.)
The Trump administration would thus bring an end to the recent decades of more open trade policies. While Trump wants to scrap NAFTA, which involves the Canada, the U.S., and Mexico, he might be open to renegotiations. In other words, Trump wants to negotiate new trade agreements, which might be better suited for the interests of the United States.
Advertisement
Trump’s trade agreements would be more protectionist in spirit. They would enforce higher import duties to discourage imports and unfair trade practices. The same leaked memo also discusses the Trans-Pacific Partnership (TPP) and the need to file that one under “scrap” as well. Congressional leaders are saying that the TPP is dead. (Source: Ibid.)
Trump’s warnings over NAFTA have surely resonated loudly in Ottawa, Canada’s capital. Trump’s heavy protectionist threats suggest that political and economic relations won’t be easy. After the cozy relationship between President Barack Obama and Canadian Prime Minster Justin Trudeau, U.S.-Canada relations are heading for tougher times.
There is a silver lining to the Trump free trade cloud. No matter how forceful Trump might be—he may even be right—he cannot alter NAFTA overnight. President though he might be, Trump will still have to go to Congress, which has ratified it. Not everyone agrees with him. The Republicans are pro-free trade.
Trump cannot do this quickly. Prolonging the terms of undoing NAFTA will weigh on bilateral Canadian-American relations. These are always important. Still, if it comes down to ending NAFTA, there is always the bilateral Canada–United States Free Trade Agreement signed in 1989. Trump prefers bilateral agreements.
Trump could reopen that deal as he pulls the U.S. away from NAFTA. Canada can still keep the Mexican free trade deal open. The last time the United States had torn up a treaty was in 1866; it was the Elgin-Marcy Treaty, a trade cooperation agreement with Canada.
