Trump has said that he wants to speed up talks to either renegotiate or replace the NAFTA trade pact

Trump has said that he wants to speed up talks to either renegotiate or replace the NAFTA trade pact

President Donald Trump says he is looking at "tweaking" parts of the North American Free Trade Agreement (NAFTA) pact with Canada, and that the focus of any changes would be on US trade with Mexico.

Speaking at a news conference yesterday (13 February) after meeting with Canadian Prime Minister Justin Trudeau, Trump described US-Canada trade as "a much less severe situation" than trade with Mexico.

"We have a very outstanding trade relationship with Canada. We'll be tweaking it," Trump said. "It's a much less severe situation than what's taking place on the southern border. On the southern border, for many, many years the transaction was not fair to the United States."

The NAFTA trade pact between the United States, Canada and Mexico came into force on 1 January 1994 and created one of the world's largest free trade zones by reducing or eliminating tariffs on most products.

But since taking office Trump has said that he wants to speed up talks to either renegotiate or replace the pact – although there have been no clues as to his renegotiation objectives or timetable. Commerce secretary nominee Wilbur Ross would be his top negotiator on the deal.

Under US law he would need give Congress 90 days' notice before starting NAFTA renegotiations, and Congressional approval would likely be needed for any changes.

NAFTA renegotiation may need congressional approval

Earlier this month Mexican President Enrique Peña Nieto said he would start trade negotiations to reform NAFTA in May, after a 90-day consultation period with Mexican businesses. Economy Minister Ildefonso Guajardo said in mid-January that if Trump imposes a tariff or a border adjustment tax, Mexico would pursue "mirror actions." 

Mexico textile and apparel makers eye tit-for-tat trade war

However, a recent analysis on just-style concluded that withdrawing from NAFTA would hurt US textile exports and do little to curb apparel imports.

How would end of NAFTA affect US apparel industry?

A joint statement from Trump and Trudeau acknowledged the close economic ties between the two countries and promised co-operation to ensure growth and prosperity.

"We recognise our profound shared economic interests, and will work tirelessly to provide growth and jobs for both countries.

"Canada is the most important foreign market for 35 US States, and more than $2bn in two-way trade flows across our shared border every day. Millions of American and Canadian middle-class jobs, including in the manufacturing sector, depend on our partnership.

"We affirm the importance of building on this existing strong foundation for trade and investment and further deepening our relationship, with the common goal of strengthening the middle class.

"The United States and Canada also recognise the importance of cooperation to promote economic growth, provide benefits to our consumers and businesses, and advance free and fair trade.

"We will continue our dialogue on regulatory issues and pursue shared regulatory outcomes that are business-friendly, reduce costs, and increase economic efficiency without compromising health, safety, and environmental standards. We will work together regarding labour mobility in various economic sectors."