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Trump May Threaten a Trade War Over NAFTA, but His Options Are Limited

by Edward Alden
February 16, 2017

Trucks wait in a long queue for border customs control to cross into the U.S. at the Otay border crossing in Tijuana, Mexico (Jorge Duenes/Reuters).


When then-President Bill Clinton signed the North American Free Trade Agreement in a White House ceremony in December 1993, he called it “a defining moment” for the United States and praised Mexico and Canada as “our partners in the future that we are trying to make together.” All three countries had made what then seemed like an irreversible decision to marry their economic futures. Yet today, less than a quarter-century later, those bonds are badly fraying.

The new U.S. president, Donald Trump, wants to renegotiate NAFTA, which he has called “the worst trade deal in history.” Mexican President Enrique Peña Nieto has seen his approval rating fall to a paltry 12 percent as Trump has pressured American companies to stop investing in Mexico. Canadian Prime Minister Justin Trudeau, who visited the White House this week, is trying to sidestep Mexico and curry favor with Trump by talking up the balanced trading relationship between his country and the United States. The “three amigos” of North America have each retreated to their own corners, eyeing each other suspiciously.

Their suspicions run deep because neither Mexico nor Canada knows quite what the new American president intends to do next. During the transition and into the early weeks of his presidency, Trump and his advisers issued all sorts of threats, from hefty across-the-board tariffs on Mexican imports to targeted border taxes aimed at American companies that build factories in Mexico and sell back into the United States. Those early flourishes, coupled with Trump’s repeated threats to force Mexico to pay for the new border wall he promised in his campaign, led Peña Nieto to cancel a planned visit to Washington last month.

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Post a Comment 4 Comments

  • Posted by Scott M. Thompson

    Mexico still has oil. I have proposed that Secretary of State Rex Tillerson try to avoid building a wall, then trying to get Mexico to pay for, should instead engage in fair or reciprocal trade of oil for the means to fight Mexico. drug problem and other problems in Mexico’s interest.

  • Posted by Savannah

    No on knows what are the intentions of the new president! This can cause instability on relationship between Mexico and Canada!

  • Posted by Hugo

    there is no reason for trade to stop, its just unregulated trade, in the case of Mexico buying products on shortage worldwide until they can be produced will maintain a similar paradigm as with nafta, same is true for canada and the us.

    It seems there will be this investment loss for a while as regional production and other trade deals are made but then again some of this was likely to happend at some point anyway with worst results.

  • Posted by WAnderson

    He can certainly cause instability in North America. Deportations are increasing especially of non criminals. Building the wall will cause further deterioration of relations with Mexico. I don’t expect him to do much about Canada because Canada has high wages and Canada is a “white” country

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