The White House is considering a draft executive order to withdraw the United States from the North American Free Trade Agreement (NAFTA), Reuters reports, citing an unidentified Trump administration official.
The action under consideration could signal heightened prospects that one of the world’s biggest trading blocs could unravel in an economically damaging dispute, the report said.
The potential executive order sent stocks and currencies falling in Mexico and Canada.
Trump has long accused Mexico of destroying US jobs and recently ramped up his criticism of Canada, saying last week that Ottawa’s protection of its dairy industry was “unfair.”
Trump this week ordered 20 percent tariffs on imports of Canadian softwood lumber, setting a tense tone as the three countries prepared to renegotiate the 23-year-old trade pact.
As president, Trump has broad authority on trade policy, including the power to withdraw from NAFTA without votes by Congress, according to many legal analysts.
It was under an executive order signed by Trump on Jan. 23 that the US pulled out of the sweeping Trans-Pacific Partnership trade deal.
Mexico had expected to start NAFTA renegotiations in August but the possible executive order could add urgency to the timeline, the report noted.
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