Trump’s Tough Talk on Nafta Raising Fears of Pact’s Demise
Business leaders have become spooked by the increasing odds of the trade deal’s demise, and on Monday, more than 310 state and local chambers of commerce sent a letter to the administration urging the United States to remain in Nafta. Speaking in Mexico on Tuesday, the president of the U.S. Chamber of Commerce, Tom Donohue, said the negotiations had “reached a critical moment. And the chamber has had no choice but ring the alarm bells.”
“Let me be forceful and direct,” he said. “There are several poison pill proposals still on the table that could doom the entire deal.”
If the deal does fall apart, the United States, Canada and Mexico would revert to average tariffs that are relatively low — just a few percent in most cases. But several agricultural products would face much higher duties. American farmers would see a 25 percent tariff on shipments of beef, 45 percent on turkey and some dairy products, and 75 percent on chicken, potatoes and high fructose corn syrup sent to Mexico.
Nafta is likely to be a key topic of conversation as Prime Minister Justin Trudeau of Canada meets with Mr. Trump in Washington on Wednesday afternoon.
For months, some of the most powerful business leaders in the country, and the lobbies and political figures that represent them, had hoped that the president’s strong wording was more a negotiating tactic than a real threat and that he would ultimately go along with their agenda of modernization. Nafta is nearly a quarter-century old, and people across the political spectrum say it should be updated for the 21st century while preserving the open trading system that has linked the North American economy.
The pact has allowed industries to reorganize their supply chains around the continent to take advantage of the three country’s differing resources and strengths, lifting the continent’s economies and more than tripling America’s trade with Canada and Mexico since its inception. Economists contend that many workers have benefited from these changes in the form of higher wages and employment, but many workers have lost their jobs as manufacturing plants relocated to Mexico or Canada, making Nafta a target of labor unions, many Democrats and a few industries.
But most business leaders had hoped that the president, whose Nafta criticism has been unrelenting, would be content to oversee tweaks to modernize the agreement, and then call it a political transformation.