White House prepares executive order withdrawing from NAFTA
The Trump administration is preparing an executive order to withdraw from the North American Free Trade Agreement.
According to Politico, which cited two White House officials, the order may be unveiled later this week or early next week.
In recent weeks, US president Donald Trump has increased his rhetoric a notch, against both Mexico and Canada.
Acting as a backdrop, Germany has also come under increased pressure from the US (and others) recently due to its elevated trade surplus.
As well, earlier in the week the US slapped new tariffs on softwood lumber from its northern neighbour.
Following news of those tariffs, Barclays Research told clients that any further such measures are likely to be specific and limited in nature, with wider action not expected until later in 2018.
"Taking such action does require some political capital. The administration currently has many political agendas, all of which need considerable support from Congress. Should the President take unilateral action that proves unpopular, support for the other legs of the administrations agenda could falter.
"We believe the administration will wait for this report and for appropriate political timing before implementing broad-based and substantive new tariffs. We continue to expect some form of new and restrictive trade policies around the end of 2017, similar to the timing we expect for tax cuts and a new budget," Barclays said.
According to Politico, the executive order may be a gambit in order to extract better terms from its neighbours, but it might easily snowball into the real thing.
The order was reportedly drafted by the head of Trump's National Trade Council, Peter Navarro, and his chief strategist, Steve Bannon.
As of 1744 GMT the US dollar was 2.13% higher against the Mexican peso to 19.26 but only 0.29% stronger versus the Canadian dollar to 1.3611.