In yet another reversal, President Trump has announced that, at least at this very moment, he now will not pull out of the North American Free Trade Agreement and will attempt to renegotiate and improve the current agreement. Only hours earlier, a senior administration official revealed that the White House was considering an executive order to begin withdrawing from NAFTA. These latest events highlight the president's ever-changing position towards the future of NAFTA, leaving uncertainty for foreign and domestic businesses and for the governments of the United States' NAFTA partners, Canada and Mexico.
Officials in both countries indicate that they are beginning to view the president's position changes on NAFTA, as well as industry-specific tariffs aimed at both countries, as part of his bargaining strategy. However, Canadian and Mexican officials also made it clear that they will not sign on to NAFTA changes that are not mutually beneficial and have begun to look at other foreign suppliers in case negotiations sour.
The president announced that negotiations have already started; however, formal negotiations will likely not occur until this summer. Changes in NAFTA, such as in country-of-origin determinations and the border adjustment tax, could cause major problems for businesses that have relied on NAFTA for their supply chains for decades. The attorneys in the International Trade & Customs Practice of Lewis Brisbois are constantly monitoring this ever-changing situation and suggest that businesses relying on NAFTA stay apprised of the latest developments and contact our practice group with any questions as the NAFTA negotiations progress.
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