Economy

The Self-Imposed NAFTA Deadline May Be Extended

JM Ashby
Written by JM Ashby

It has long been my assumption (and the assumption of foreign officials) that Trump would unilaterally withdraw from the North American Free Trade Agreement (NAFTA) this spring because that is the deadline he insisted on for renegotiating the deal, but it's possible the guillotine won't drop on schedule.

Trump's recent interview with the Wall Street Journal made headlines for an entirely different reason, but he also implied that he's open to extending the deadline.

Trump - who has long threatened to walk away from the 1994 North American Free Trade Agreement unless major changes are made - told the Wall Street Journal on Thursday that “a lot of things are hard to negotiate” ahead of a Mexican presidential election in July. [...]

In his remarks on Thursday, Trump repeated he was ready to announce a U.S. withdrawal unless major changes are made but said he was “leaving it a little bit flexible” until after the Mexican election.

“We have always felt that imposing artificial deadlines was not necessary from the Canadian standpoint ... I thought that was a constructive proposal from the president,” said [Canadian Foreign Minister Chrystia Freeland]

It would be reasonable to assume Trump doesn't really care about Mexico's presidential election. But even if that were the case, the election isn't going to change anything. The demands American trade officials have made would be ridiculous to any Mexican administration.

The more likely explanation for Trump's "flexible" strategy is he's been scared straight. Numerous members of Congress have personally briefed Trump on what would happen to their districts and states if he abandons NAFTA. Chamber of Commerce president Tom Donohue says abandoning NAFTA would create a "crisis," and he's not wrong.

You may recall that Trump spoke to the American Farm Bureau Federation in Nashville, Tennessee last week, but what you may not know is that everyone in the crowd was wearing pins that say "I support NAFTA."

The fat “I Support NAFTA” pins spotted on scores of lapels made that clear. While he didn’t repeat past threats to pull out of the free-trade pact with Canada and Mexico -- two of the top three buyers of U.S. agriculture exports -- he didn’t reassure his audience either. He just briefly touched on the deal, saying he was working to “make it fair for you people again” without saying how.

Attendees like Ray Allan Mackey, who farms grain, cattle, hogs and tobacco in Hardin County, Kentucky, had been hoping for a clear message that would, as he put it, “console our minds” as commodity prices remain depressed and the trade future looks so uncertain. Mackey was pleased Trump at least brought the matter up but disappointed not to hear “a convincing note” that the White House has farmers’ backs.

These markets we’re looking at are flat, and if we don’t push exports they’re going to remain flat,” Mackey said. “We’re going to be looking at even a bigger surplus if we don’t push these products overseas. You clear that out and the face of American farmers will look a lot brighter.”

Regular Joe Blow Farmer in Kentucky has a much firmer grasp of international trade than Trump does and maybe more so than Trump's trade representative Robert Lighthizer does.

  • muselet

    Donald Trump does not understand international trade. Never has, never will.

    Farmers do understand international trade. They have to.

    Those farmers who did not vote for Donald Trump have my deepest sympathies. Those who did vote for Donald Trump brought upon themselves the economic hosing to come.

    –alopecia

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