Trump softens his anti-Nafta stance
President prepares executive orders targeting trade deficit, tariff enforcement
President Donald Trump, who has called the North American Free Trade Agreement (Nafta) “the worst trade deal” ever signed by the United States, appears to have backed off his threat to abandon the deal and is instead proposing keeping major planks in place when he begins renegotiating it later this year.
But Trump, eager to showcase his tough stance against unfair trade practices, plans to sign two executive orders that will lay the groundwork for new policies and stricter enforcement of trade laws.
The president will order a 90-day study of abusive trade practices that contribute to the US trade deficit. The Commerce Department and the US trade representative will do a country-by-country, product-by-product accounting of the reasons for the imbalance.
A second directive is aimed at increasing the collection of duties from countries whose companies US officials believe are selling products in the United States below their cost of production.
Neither measure will have an immediate impact on trade policy or enforcement, but each could eventually lead to aggressive new measures. Both are aimed at showcasing Trump’s intent to fulfill his promises on trade.
“These actions are designed to let the world know that this is another step in the president fulfilling his campaign promise,” Commerce Secretary Wilbur Ross said.
He said the findings would form the basis for decision-making by the administration on how to approach trade deficits, including the renegotiation of Nafta.
“For the first time, we’re looking comprehensively at the source of what has been a large and persistent trade deficit that has contributed to job losses, the loss of our manufacturing base and other things,” said Peter Navarro, director of Trump’s National Trade Council.
The president is poised to give Congress the legally required 90 days’ notice of his intention to renegotiate Nafta, the 1994 pact with Canada and Mexico.
In a draft letter circulated among members of Congress this week, the administration proposed adding a provision to allow tariffs to be reinstated if a flood of imports threatened to harm a domestic industry.
Trump also wants to adjust the agreement’s rules of origin, or how much of a product must be made in a Nafta country. And he wants Nafta partners to expand the market for US-made goods in their government procurement.
“The persistent US deficit in goods trade with Canada and Mexico demands that this administration take swift action to revise the relationship to reflect and respond to 21st century challenges,” read the letter, signed by Stephen Vaughn, acting US trade representative.
Trump has often said the United States could abandon Nafta if renegotiating it was not possible. But the hawkish rhetoric of the campaign has given way to more measured statements on trade from the administration that track more closely with the stance of many congressional Republicans, who are avid promoters of free trade and deeply skeptical of policies they view as restrictive or protectionist.
“In terms of what we consider to be President Trump’s economic nationalist objectives and what he has said previously about Nafta, the list of negotiating terms was relatively benign,” said Scott Lincicome, an international trade lawyer at White & Case.
US business welcomed the additional specifics on trade policy.
“The details in the letter have whet our appetite for more,” said John Murphy, senior vice president for international policy at the US Chamber of Commerce.
The tone of the eight-page draft letter, which was reported by The Wall Street Journal, did not echo Trump’s campaign speeches. Nowhere was there a mention of his threats to pull out of the agreement.
Antonio Ortiz-Mena, a former Mexican trade official, said the letter suggested a softening in tone but also contained several proposals that were likely to prompt a strong response from the Mexican government.
“There are some specific problems,” said Ortiz-Mena, now a senior adviser at Albright Stonebridge Group in Washington. “But in terms of the language used during the campaign and at the beginning of the administration, it’s not as far-reaching as some people could have expected.”
The Canadian government declined on Thursday to comment directly on the draft letter.
“Should notice of intent to renegotiate be given, Canada is prepared to discuss improvements at the appropriate time,” said Global Affairs Canada.