U.S. Chamber of Commerce President Tom Donohue warned President Trump Thursday against preemptively pulling out of the North American Free Trade Agreement to pressure congressional Democrats to accept his revised trade deal, saying that the strategy would endanger jobs.
“The reason that I think we’re going to get this done, and we shouldn’t pull out, we’re talking about 14 million American jobs” tied to trade with those two countries, Donohue told reporters on Thursday. “If you pull out of it, what you do is you start a six-month clock where you’re back in the original agreement,” meaning that tariffs would rise to pre-NAFTA levels, driving up the cost of imported goods or doing business in Canada and Mexico.
Donohue, speaking at his annual speech on the state of U.S. business, noted that not all those jobs would evaporate, but he left implicit that a NAFTA pullout could hurt the economy.
“[T]hey’re our two largest export partners,” Donohue said. “If we can’t sell that, we better find another job.”
Trump is weighing whether to preemptively withdraw from NAFTA to increase pressure on Democrats to accept and ratify his administration’s revised version of the deal, rebranded as the U.S.-Mexico-Canada Agreement. Such a tactic could leave businesses in a state of uncertainty over costs and supply chains until the situation is resolved and further rile financial markets.
Democrats so far have given the USMCA negative reviews, and even some Republicans have expressed skepticism over aspects of the revised agreement. But Sen. Chuck Grassley R-Iowa, the new chairman of the Senate Finance Committee, which has jurisdiction over trade in the Senate, said on Wednesday that he wanted to talk to Democrats about their concerns in an effort to resolve them.
“If they’re reaching the point where they have to go back to the negotiating table,” Grassley said, “I would encourage the president to pull out of NAFTA.”
