Both the Canadian dollar (CAD) and Mexican peso (MXN) fell earlier this week on reports that the president was drafting an executive order to end the pact. During his 2016 election campaign Trump described Nafta the “single worst trade deal ever” and a “killer” of US jobs.
Earlier this week the US imposed a new tariff on softwood lumber imports from Canada and Trump criticised a new Canadian tariff regime affecting US dairy products as “a disgrace”.
At the same time, the US lost a long-running trade dispute with its other Nafta neighbour as the World Trade Organisation (WTO) ruled that Mexico could impose sanctions of more than US$160m (£125m) annually against the US on commerce in tuna.
However, a White House statement confirmed that the US president had spoken with both Mexico’s president Peña Nieto and Canada’s prime minister Justin Trudeau in “pleasant and productive” conversations.
“President Trump agreed not to terminate Nafta at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries,” the statement continued.
“President Trump said: ‘It is my privilege to bring Nafta up to date through renegotiation. It is an honour to deal with both (both leaders) and I believe that the end result will make all three countries stronger and better.’”
The change of policy came as White House officials were also unveiling a tax reform plan that US treasury secretary Steven Mnuchin called “the biggest tax cut” to assist small businesses and relieve the tax burden on middle-class Americans.
Among the proposed reforms is the plan first outlined in the election campaign to cut the rate of corporate tax applied to US companies from the current 35% to 15%. Mnuchin dismissed questions about how the plan could benefit Trump’s real estate firms and stressed that it would spur growth for all sectors of the American economy.
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