NAFTA talks set to move forward after Trump suggests deal might be impossible

President Donald Trump said this week that the U.S. would “probably” withdraw from the North American Free Trade Agreement (NAFTA) at some point, issuing the remark just days after talks to renegotiate the trade deal began.

Representatives for Canada, Mexico and the U.S. met in Washington for five days of negotiations last week, and talks are scheduled to resume in Mexico City Sept. 1. Trump made his remarks at a rally in Phoenix Tuesday night.

“We have begun formal renegotiation with Mexico and Canada on NAFTA,” he said, adding, “I don’t think we can make a deal. So I think we’ll end up probably terminating NAFTA at some point.”

A U.S. withdrawal from NAFTA or a serious restructuring of the deal would have significant business and immigration consequences, though observers cautioned that Trump’s remarks might not have too much bearing on the eventual outcome of the talks. Canada and Mexico both signaled that they would proceed with the negotiations as planned.

Reuters and other media outlets reported that a high-ranking Mexican official described Trump’s remarks as a negotiating tactic, while quoting Canadian Prime Minister Justin Trudeau as saying that Canada would “stay focused on the hard work we have ahead of us at the negotiating table.”

BAL Analysis: Trump has long said the U.S. would pull out of NAFTA if it cannot reach a satisfactory restructuring of the agreement. While NAFTA is primarily a trade agreement, it contains a number of immigration provisions and a U.S. withdrawal would potentially affect hundreds of thousands of workers admitted under these provisions. BAL’s Government Affairs team prepared an analysis in April of the immigration consequences of a U.S. withdrawal from NAFTA for multinational companies and foreign high-skilled workers. Read the full analysis here.

This alert has been provided by the BAL U.S. Practice group. For additional information, please contact BerryApplemanLeiden@bal.com.

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