The North American Free Trade Agreement, long disparaged by President Donald Trump as bad for the United States, was edging closer toward collapse as negotiators gathered for a fourth round of contentious talks here this week.
In recent weeks, the Trump administration has sparred with American businesses that support NAFTA and has pushed for significant changes that negotiators from Mexico and Canada say are nonstarters. All the while, the president has continued threatening to withdraw the United States from the trade agreement.
As the trade talks began Wednesday, Trump, seated in the Oval Office beside Prime Minister Justin Trudeau of Canada, said it was “possible” that the United States would drop out of NAFTA.
“We’ll see if we can do the kind of changes that we need," Trump said. “We have to protect our workers. And in all fairness, the prime minister wants to protect Canada and his people also. So we’ll see what happens with NAFTA, but I’ve been opposed to NAFTA for a long time, in terms of the fairness of NAFTA.”
Trudeau, in comments later at the Canadian Embassy, said he remains optimistic about the potential for a NAFTA deal but noted that Canadians must be “ready for anything.”
The collapse of the 1994 trade deal would reverberate throughout the global economy, inflicting damage far beyond Mexico, Canada and the United States and affecting industries as varied as manufacturing, agriculture and energy. It would also sow at least short-term chaos for businesses like the auto industry that have arranged their North American supply chains around the deal’s terms.
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, Thomas J. Donohue, said the negotiations had “reached a critical moment. And the chamber has had no choice but ring the alarm bells.”
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.