Ag Policy Blog
President Again Talks About Pulling Out of NAFTA
President Donald Trump once again threatened to pull out of North American Free Trade Agreement during his campaign speech Tuesday night in Arizona.
"Personally, I don’t think we can make a deal," Trump said. "Because we have been so badly taken advantage of. They have made such great deals -- both of the countries, but in particular, Mexico -- that I don't think we can make a deal. So I think we'll end up probably terminating NAFTA."
The president's statements come after the opening round of talks last week. It should be noted the original NAFTA talks began in 1990 and took nearly two years to get a draft agreement. It took another year before Congress ratified the deal.
The president was ready to withdraw from NAFTA in April before Agriculture Secretary Sonny Perdue and others convinced him to renegotiate the trade deal rather than terminate it.
Most people so far are taking Trump's campaign-rally comments as a negotiating ploy.
"In general there's a disconnect between Trump on the campaign trail, which is the Trump we see at these rallies, and Trump in the Oval Office," said Cullen Hendrix, a nonresident senior fellow at the Peterson Institute for International Economics, a Washington-based think tank, in an article on CNBC's website. "He tends to make pretty bold claims and then we see little in the way of follow-through on the policy side."
The same article cited a tweet from Mexico's Foreign Minister Luis Videgaray, "No surprises: we are already in a negotiation. Mexico will remain on the table with serenity and firmness and national interest ahead." http://dld.bz/…
The U.S. had a $55.6 billion trade deficit with Mexico in 2016, which equated to roughly 9.5% of the total trade volume between the two countries of $579.7 billion. The U.S. exported $262 billion while importing $317.6 billion. Part of the reason for the deficit is the spread in the exchange between the dollar and the peso, which right now is $1 for every 17.7 pesos. The currency spread has gotten wider since the beginning of 2015. It peaked at 21.59 to $1 just before President Trump was elected.
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U.S.-Canada trade equaled $627.8 in 2016. U.S. exports were $320.1 billion while imports were $307.6 billion. The U.S. had a $12.5 billion trade surplus last year.
The entire U.S. trade equates to $1.2 trillion in total trade with the net U.S. trade deficit amounting to about 3.5% of the total trade value.
U.S. Trade Ambassador Robert Lighthizer reiterated Trump's message on Wednesday. "President Trump has been clear from the very beginning that if the NAFTA negotiations are unsuccessful, he will withdraw from the agreement," Lighthizer said in a statement. Substantial changes are needed to fix NAFTA's "fundamental failures." http://dld.bz/…
Talks resume Sept. 1-5 in Mexico City.
DTN had a series of articles on the importance of NAFTA to the grain trade earlier this month.
08/08/2017 NAFTA along the Rio Grande
08/09/2017 NAFTA Talks and Future Plans
08/10/2017 NAFTA’S Economic Integration
08/11/2017 Hedging American Feed Trade
08/14/17 Yucatan Trade Storm at Sea
I can be reached at Chris.Clayton@dtn.com
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