Tag Archives: Trade Deal

Trump says no hurry to sign China deal as trade war escalates

A general view of Kwai Tsing Container Terminals for transporting shipping containers in Hong Kong, China July 25, 2018. REUTERS/Bobby Yip

By Susan Heavey and Yawen Chen

WASHINGTON/BEIJING (Reuters) – U.S. President Donald Trump on Friday said he was in no hurry to sign a trade deal with China as Washington imposed a new set of tariffs on Chinese goods and negotiators entered a second day of last-ditch talks to try to salvage an agreement.

The United States early on Friday increased its tariffs on $200 billion in Chinese goods to 25% from 10%, rattling financial markets already worried the 10-month trade war between the world’s two largest economies could spiral out of control.

The move, which is expected to lead China to retaliate, went into effect just hours after U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He ended a first day of talks in Washington without a deal.

They resumed negotiations on Friday morning.

In a series of morning tweets, Trump defended the tariff hike and said he was in “absolutely no rush” to finalize a deal, adding that the U.S. economy would gain more from the levies than any agreement.

“Tariffs will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind,” Trump said in one of the tweets.

Despite Trump’s insistence that China will absorb the cost of the tariffs, U.S. businesses will pay them and likely pass them on to consumers.

Global equities sagged after his comments. MSCI’s All-Country World Index, which tracks stocks across 47 countries, was down 0.8% in London. U.S. stock indexes, which have fallen sharply this week, opened lower again

Trump, who has adopted protectionist policies as part of his “America First” agenda and railed against China for trade practices he labels unfair, said the trade talks, originally due to last two days, could drag on beyond this week.

“We will continue to negotiate with China in the hopes that they do not again try to redo deal!” said Trump, who has accused Beijing of reneging on commitments it made during months of negotiations.

Following the U.S. tariff hike, China’s Commerce Ministry said it would take countermeasures but did not elaborate.

The ministry said it “hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation.”

‘RUSSIAN ROULETTE’

Under the latest U.S. action, U.S. Customs and Border Protection imposed a 25% duty on more than 5,700 categories of products leaving China after 12:01 a.m. EDT (0401 GMT) on Friday.

Seaborne cargoes shipped from China before midnight were not subject to the new tax as long as they arrived in the United States prior to June 1. Those cargoes will be charged the original 10% rate.

“This delay might create an unofficial window during which the U.S. and China can continue to negotiate,” investment bank Goldman Sachs wrote in a note, adding that it was a “somewhat positive sign” that talks were continuing.

Trump gave U.S. importers less than five days notice about his decision to increase the rate on $200 billion worth of goods, which now matches the rate on a prior $50 billion category of Chinese machinery and technology goods.

He has also threatened to impose new tariffs on another $325 billion in Chinese imports.

Investors worry that an escalating trade war could further damage a slowing global economy. The higher tariffs could reduce U.S. gross domestic product (GDP) by 0.3% and China’s by 0.8% in 2020, consultancy Oxford Economics said.

“There is no greater threat to world growth,” French Finance Minister Bruno Le Maire said on Friday.

Many business groups have opposed the tariffs, saying they will be disastrous for companies and lead to higher prices for consumers across a range of products.

Gary Shapiro, chief executive of the Consumer Technology Association, said the tariffs would be paid by American consumers and businesses, not China, as Trump has claimed.

“Our industry supports more than 18 million U.S. jobs, but raising tariffs will be disastrous,” Shapiro said in a statement.

It may take three or four months for American shoppers to feel the pinch but retailers will have little choice but to raise prices to cover the rising cost of imports before too long, economists and industry consultants say.

Mats Harborn, president of the European Union Chamber of Commerce in China, said: “European companies are watching aghast as the U.S. and China play Russian roulette with the world economy.”

RETALIATE HOW?

The biggest Chinese sector affected by the latest tariff increase is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of U.S.-made products.

Furniture, lighting products, auto parts, vacuum cleaners and building materials also are high on the list of products subject to increased duties.

Just hours after the U.S. move, which will add pressure on an already slowing Chinese economy, China’s central bank said it was fully able to cope with any external uncertainty.

On Monday, the People’s Bank of China cut the amount of reserves that some small and medium-sized banks need to hold, freeing up funds for lending to cash-strapped businesses.

James Green, a senior adviser at McLarty Associates who until August was the top USTR official at the embassy in Beijing, said he expected China would increase non-tariff barriers on U.S. firms, such as delaying regulatory approvals.

“I think the Chinese, in the end, will want to keep negotiations going. The question is: ‘where do they go for retaliation?'” he said.

Even without the trade war, China-U.S. relations have continued to deteriorate, with an uptick in tensions over the South China Sea, Taiwan, human rights and China’s plan to re-create the old Silk Road, called the Belt and Road Initiative.

(Reporting by David Lawder in Washington, and Yawen Chen, Michael Martina, Ryan Woo, Ben Blanchard and Kevin Yao in Beijing, and Xihao Jiang in Shanghai; Writing by Paul Simao; Editing by Simon Cameron-Moore, Kim Coghill and Bill Trott)

Trump says U.S.-China trade deal may be reached in four weeks

U.S. President Donald Trump talks with with China's Vice Premier Liu He in the Oval Office of the White House in Washington, U.S., April 4, 2019. REUTERS/Jonathan Ernst

By Jeff Mason and David Lawder

WASHINGTON (Reuters) – U.S. President Donald Trump said on Thursday the United States and China were close to a trade deal that could be announced within four weeks, while warning Beijing that it would be difficult to allow trade to continue without a pact.

The two countries are engaged in intense negotiations to end a months-long trade war that has rattled global markets, but hopes of a resolution soared after both sides expressed optimism following talks in Beijing last week.

Speaking to reporters at the White House at the start of a meeting with Chinese Vice Premier Liu He, Trump said some of the tougher points of a deal had been agreed but there were still differences to be bridged.

“We’re getting very close to making a deal. That doesn’t mean a deal is made, because it’s not, but we’re certainly getting a lot closer,” Trump said in the Oval Office.

“And I would think with, oh, within the next four weeks or maybe less, maybe more, whatever it takes, something very monumental could be announced.”

Trump said he would hold a summit with Chinese President Xi Jinping if there were a deal.

Xi assured Trump that text of the China-U.S. trade could be finalized soon, in a message conveyed by Liu He.

According to state-run news agency Xinhua, Liu He told Trump that Xi believed under his and Trump’s leadership, China-U.S. relations will make new and greater progress.

Xi said that in the past month or more, the two sides’ trade teams had maintained close contact and “achieved new and substantive progress on issues in the text of two countries’ trade agreement”.

“I hope the two sides’ trade teams can continue working in the spirit of mutual respect, equality, and mutual benefit to resolve each other’s concerns, and finish negotiations on the text of the China-U.S. trade agreement soon,” Xi said to Trump through Liu.

KEEPING LEVERAGE

Trump declined to say what would happen to U.S. tariffs on $250 billion worth of goods as part of a deal. China wants the tariffs lifted, while U.S. officials are wary of giving up that leverage, at least for now.

Asked about the benefits of an agreement for China, Trump said: “It’s going to be great for China, in that China will continue to trade with the United States. I mean, otherwise, it would be very tough for us to allow that to happen.”

Goods trade between the United States and China, the world’s two largest economies, totaled $660 billion last year, according to U.S. Census Bureau data, consisting of imports of $540 billion from China and $120 billion in exports to China.

On China’s behalf, Liu cited “great progress” in the talks because of Trump’s direct involvement and expressed hope that the talks would lead to “a good result.”

U.S. SEEKS SWEEPING CHANGES

Trump has previously threatened to impose punitive tariffs on all imports from China, more than a half-trillion dollars worth of products.

U.S. Trade Representative Robert Lighthizer, who is leading the talks for the Trump administration, said there were still some “major, major issues” to resolve and praised Liu’s commitment to reform in China.

Asked about the remaining sticking points, Trump mentioned tariffs and intellectual property theft. He said he would discuss tariffs with Liu in their meeting.

“Some of the toughest things have been agreed to,” Trump said. He later said that an enforcement plan for a deal remained a sticking point as well.

“We have to make sure there’s enforcement. I think we’ll get that done. We’ve discussed it at length,” he said.

Lighthizer and Treasury Secretary Steven Mnuchin are holding talks in Washington with a Chinese delegation this week after meeting together in Beijing last week. The current round of talks is scheduled to go through Friday and possibly longer.

Hopes that the talks were moving in a positive direction have cheered financial markets in recent weeks. But U.S. stocks were mixed on Thursday as investors waited for more developments in the trade negotiations, with the Dow Jones industrial Average slightly higher, and the S&P 500 and Nasdaq Composite slightly lower. [.N]

The United States is seeking reforms to Chinese practices that it says result in the theft of U.S. intellectual property and the forced transfer of technology from U.S. companies to Chinese firms.

Administration officials initially envisioned a summit between Trump and Xi potentially taking place in March, but some U.S. lawmakers and lobbying groups have said recently they were told that the administration was now aiming for a deal in late April.

OUTSTANDING ISSUES

White House economic adviser Larry Kudlow said last week that the talks were “not time-dependent” and could be extended for weeks or even months longer.

While some reform pledges by Beijing are largely set, including an agreement to avoid currency manipulation, an enforcement mechanism to ensure that China keeps its pledges and the status of U.S. tariffs on $250 billion worth of Chinese goods must be resolved.

“China has been very clear, publicly and privately, that they would like to see all the tariffs removed,” U.S. Chamber of Commerce international affairs chief Myron Brilliant told reporters on Tuesday.

“The (Trump) administration has been equally clear that they want to keep some of the tariffs in place as a way to have leverage over China fulfilling its obligations under whatever final package is reached.”

(Reporting by Jeff Mason and David Lawder; Additional reporting by Chris Prentice and Michael Martina in BEIJING; Editing by Peter Cooney, Simon Cameron-Moore and Michael Perry)

White House’s Hassett says progress in China trade talks-Fox Business

FILE PHOTO: Trump economic adviser Kevin Hassett gestures as he speaks during a news briefing at the White House in Washington, U.S., September 10, 2018. REUTERS/Kevin Lamarque

WASHINGTON (Reuters) – White House economic adviser Kevin Hassett said on Monday that U.S. Trade Representative Robert Lighthizer has made progress in talks with China and a deal was possible to end a dispute that has already put tariffs on hundreds of billions of dollars worth of goods.

“I think that it looks like Ambassador Lighthizer has made a lot of progress, and we might get there on China,” Hassett said in an interview with Fox Business Network.

World markets were buoyed on Monday by investors’ optimism that a trade deal could be cemented as soon as this month to resolve the ongoing trade war between the world’s two largest economies.

“I think everybody’s hopeful, as the markets are, that this is going to get to the finish line sometime soon,” Hassett told Fox, adding that details of any deal are still being worked out.

On Sunday, U.S. President Donald Trump said on Twitter that trade talks were progressing well and that he had asked China to immediately remove all tariffs on U.S. agricultural products while delaying his own plan to impose 25 percent tariffs on Chinese goods.

A summit between Trump and his Chinese counterpart Xi Jinping could occur around March 27 to finalize a deal, the Wall Street Journal reported on Sunday, citing a source briefed on negotiations.

A representative for the White House said they had no comment on the ongoing negotiations.

(Reporting by Doina Chiacu, Susan Heavey and Steve Holland; Editing by Chizu Nomiyama and Jeffrey Benkoe)

Trump upbeat on China trade talks but wants broad access for U.S. firms

FILE PHOTO: U.S. Trade Representative Robert Lighthizer (2nd right) sits across from China's Vice Premier Liu He (left) during the opening of US-China Trade Talks in the Eisenhower Executive Office Building at the White House in Washington, U.S., January 30, 2019. REUTERS/Leah Millis/File Photo

By Doina Chiacu and David Lawder

WASHINGTON (Reuters) – President Donald Trump expressed optimism about forging a comprehensive trade deal with China as high-level talks continued on Thursday, but said any arrangement that fails to open Chinese markets broadly to U.S. industry and agriculture would be unacceptable.

As delegations from the world’s two top economies held the second of two scheduled days of talks in the U.S. capital aimed at easing a six-month-old trade war, Trump also said no final accord will be made until he meets with Chinese President Xi Jinping in the near future.

The talks were aimed at resolving deep differences over China’s intellectual property practices. Trump has threatened to raise tariffs on $200 billion of Chinese goods to 25 percent from 10 percent on March 2 if an agreement is not reached and impose new tariffs on the rest of Chinese goods shipped to the United States.

Trump was scheduled to meet with the leader of the Chinese delegation, Vice Premier Liu He, at the White House at 3:30 p.m. as talks conclude.

“Meetings are going well with good intent and spirit on both sides,” Trump said on Twitter. “No final deal will be made until my friend President Xi, and I, meet in the near future to discuss and agree on some of the long-standing and more difficult points.”

Trump, who has engaged in a series of fights with a variety of trade partners since becoming president in 2017, has acted as the final decision-maker in U.S. trade negotiations. Trump has vetoed multiple proposed trade deals with China, choosing to push ahead with tariffs on Chinese goods to gain leverage.

The Republican president set a high bar for any agreement in the current round of talks, writing on Twitter, “China’s representatives and I are trying to do a complete deal leaving NOTHING unresolved on the table.”

Trump said he was looking for China to open its markets “not only to Financial Services, which they are now doing, but also to our Manufacturing, Farmers and other U.S. businesses and industries. Without this a deal would be unacceptable!”

Chinese negotiators proposed a meeting between Trump and Xi next month in the Chinese city of Hainan, the Wall Street Journal reported.

Two White House officials said the Chinese had not made an invitation in the current talks for Trump to meet Xi in China soon, but added that they would not be surprised if such an offer was extended during Liu’s meeting on Thursday.

“The White House thus far has been focused on substance, not next steps,” one official told Reuters, speaking on condition of anonymity.

THUMBS UP

People’s Bank of China Governor Yi Gang declined comment on Chinese proposals as he left the delegation’s hotel for the meetings in Eisenhower Executive Office Building, next to the White House. Asked how the talks were going, Yi flashed a thumbs-up sign.

The Journal quoted anonymous sources as saying Chinese proposals mostly involved more purchases of U.S. farm and energy products and promises to invite more American capital into China’s manufacturing and financial services sectors.

U.S. officials have demanded that Beijing make deep structural changes to its industrial policies, including broad new protections for American intellectual property and an end to practices that Washington has said force U.S. companies to transfer technology to Chinese firms in exchange for market access.

The U.S. complaints, along with accusations of Chinese cyber theft of American trade secrets and a systematic campaign to acquire U.S. technology firms, were used by Trump’s administration to justify punitive tariffs on $250 billion worth of Chinese imports.

China has retaliated with tariffs of its own, but has suspended some and is allowing some purchases of U.S. soybeans during the talks.

Chinese officials have said their policies do not coerce technology transfers. They have emphasized steps already taken, including reduced automotive tariffs and a draft foreign investment law expected to be approved in March that improves access for foreign firms and promises to outlaw “administrative means to force the transfer of technology.”

A crucial component of any progress in the talks, according to U.S. officials, is agreement on a mechanism to verify and enforce China’s follow-through on any reform pledges. This could maintain the threat of U.S. tariffs on Chinese goods for the long term.

The U.S. tariffs on Chinese goods are just one front in Trump’s efforts to upend the global trading order with his “America First” strategy. He has also imposed global tariffs on imported steel and aluminum, washing machines and solar panels and has threatened to raise tariffs on imported cars unless Japan and the European Union offer trade concessions.

(Reporting by Doina Chiacu, Susan Heavey, Chris Prentice, Jeff Mason, Steve Holland, Alexandra Alper and David Lawder; Writing by David Lawder; Editing by Will Dunham)

Mexico’s president did not discuss border wall with Trump

FILE PHOTO: Mexico's new President Andres Manuel Lopez Obrador arrives for an event to unveil his plan for oil refining, in Paraiso, Tabasco state, Mexico, December 9, 2018. REUTERS/Alexandre Meneghini

By Anthony Esposito and Doina Chiacu

MEXICO CITY/WASHINGTON (Reuters) – Mexican President Andres Manuel Lopez Obrador said on Thursday he has not discussed a proposed border wall with President Donald Trump, as the U.S. leader seemingly backtracked on threats to make Mexico pay for the controversial project.

“We have not discussed that issue, in any conversation. … It was a respectful and friendly conversation,” Lopez Obrador told reporters following a tweet in which the U.S. president said a new trade deal with Mexico and Canada would cover the cost of a wall.

The two leaders spoke by telephone on Wednesday. Lopez Obrador said they discussed the possibility of creating a joint program for development and job creation in Central America and Mexico.

One of Trump’s key campaign promises was to build the border wall and he had long pledged that Mexico — not U.S. taxpayers — would fund it.

In a Twitter post early on Thursday, Trump again insisted that Mexico will foot the bill for the border wall.

He wrote that payment will begin with savings for the United States as a result of the renegotiated trade deal between the United States, Mexico and Canada. “Just by the money we save, MEXICO IS PAYING FOR THE WALL!”

Mexico has repeatedly rejected Trump’s demand that it pay for the project, and it is unlikely the country’s new president will reverse that course.

Funding for the border wall has been a sticking point in spending bills before the U.S. Congress, and Trump clashed with leading Democrats over the issue during an Oval Office meeting on Tuesday.

One of them, Senate Democratic leader Chuck Schumer, taunted Trump over his Mexico claim later on Thursday.

“Mr. President: If you say Mexico is going to pay for the wall (which I don’t believe), then I guess we don’t have to! Let’s fund the government,” Schumer retorted in his own Twitter post.

Lopez Obrador said he also discussed a possible meeting with Trump in Washington.

“He invited me. I’m also able to go to Washington, but I think that both for him and for us there must be a reason and I think the most important thing would be to sign this agreement or meet with that purpose,” said Lopez Obrador.

(Reporting by Anthony Esposito in Mexico City and Doina Chiacu in Washington; editing by Frank Jack Daniel and Jonathan Oatis)

UK PM May doing ‘fantastic’ job on Brexit, says Trump, promising trade deal

British Prime Minster Theresa May and her husband Philip stand together with U.S. President Donald Trump and First Lady Melania Trump at the entrance to Blenheim Palace, where they are attending a dinner with specially invited guests and business leaders, near Oxford, Britain, July 12, 2018. REUTERS/Hannah McKay

By Jeff Mason and William James

CHEQUERS, England (Reuters) – U.S. President Donald Trump said on Friday he looked forward to finalizing a post-Brexit trade deal with Britain, marking an abrupt change from a newspaper interview when he said Prime Minister Theresa May’s strategy would kill such an agreement.

In an interview published just hours before the two leaders held talks, Trump chided the “very unfortunate” results of the prime minister’s proposals for Brexit and her negotiating tactics as Britain prepares to leaves the European Union in March next year.

However, Trump later said May was doing a “fantastic job”.

“Once the Brexit process is concluded and perhaps the UK has left the EU, I don’t know what they’re going to do but whatever you do is OK with me, that’s your decision,” Trump told a press conference with May in the garden of her official country residence Chequers.

“Whatever you do is OK with us, just make sure we can trade together, that’s all that matters. This is an incredible opportunity for our two countries and we will seize it fully.”

Last week at the same location, May finally won agreement for her Brexit plans from her cabinet but within days two senior ministers had quit, departures which Trump said earlier in the week had left Britain in turmoil.

Hours after those proposals were formally published, Trump cast further doubt on the strategy, delivering a withering verdict in an interview with the Sun newspaper.

“If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal,” Trump said. “I would have done it much differently. I actually told Theresa May how to do it, but she didn’t listen to me.”

Asked about that interview, Trump said he did not criticize the prime minister and was gushing in his praise of his host, saying she was tough and capable.

“This incredible woman right here is doing a fantastic job, a great job,” he said. “Unfortunately, there was a story that was done which was generally fine but it didn’t put in what I said about the prime minister and I said a tremendous thing. It’s called fake news.”

“HIGHEST LEVEL OF SPECIAL”

May, likewise, glossed over the comments.

“We agreed today that as the UK leaves the European Union we will pursue an ambitious U.S.-UK free trade agreement,” she said. “The Chequers agreement reached last week provides the platform for Donald and me to pursue an ambitious deal that works for both countries right across our economies.”

May and Trump both spoke of the importance of the “special relationship” between their two countries, something that Brexit supporters hope will reap benefits when Britain leaves the EU, allowing it to forge closer trade ties with the world’s biggest economy.

“I would say I would give our relationship in terms of grade the highest level of special,” Trump said.

However, many have cast May’s “business-friendly” plan as a betrayal that would leave Britain too close to the EU, including lawmakers in her deeply divided Conservative Party who have warned that she might face a leadership challenge.

During the press conference, May also thanked Trump for his support over Russia which Britain has blamed for a nerve agent attack on a former Russian spy in southwest England in March.

Trump is due to meet Putin, who has rejected the nerve agent claims, at a summit when he finishes his four-day visit to Britain, and said he would raise the issue of reducing nuclear weapons.

“It will certainly be something that we bring up and talk about,” the U.S. president said.

As Trump and May spoke, thousands of protesters marched against the president through central London, one of more than 100 demonstrations planned against the president during his stay.

While Trump’s trip was not a full state visit, he has been given red carpet treatment and is scheduled to have tea later with Queen Elizabeth at Windsor Castle, where her grandson Prince Harry married U.S. actress Meghan Markle in May.

(Writing by Guy Faulconbridge and Michael Holden, editing by Larry King, Kevin Liffey and David Stamp)

U.S. ‘looking for a deal’ with China on trade: White House adviser

FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee

By Susan Heavey and Leika Kihara

WASHINGTON/TOKYO (Reuters) – The United States is seeking to make a trade deal with China, White House economic adviser Larry Kudlow said on Tuesday as bilateral talks between the world’s two economic powerhouses resume in Washington this week.

Kudlow, speaking in a live interview with Politico news outlet, said he backed U.S. Treasury Secretary Steven Mnuchin’s efforts to reach an agreement with Beijing and that both countries must take action.

“He is looking for a deal, I support him on that, wholeheartedly, assuming it’s a good deal. He has my support,” Kudlow said, adding that no agreement had been reached yet.

“Both sides should try to lower tariffs as much as possible … and to take down non-tariff barriers wherever they are,” he told Politico. “Free and open trade, I think that’s the solution. I think that’s where we are as a group.”

His comments come as U.S. President Donald Trump’s top trade and economic officials prepare to meet with Chinese Vice Premier Liu He to discuss trade concerns ranging from intellectual property protections to farm goods to steel capacity.

Trump has long-promised to crack down on China and raised concerns about an all-out trade war after threatening $150 billion in tariffs and prompting China to retaliate.

But he offered an olive branch in calling on U.S. officials to revisit penalties for Chinese company ZTE Corp for flouting U.S. sanctions on trade with Iran and North Korea.

“Trade negotiations are continuing with China. They have been making hundreds of billions of dollars a year from the U.S., for many years. Stay tuned!” Trump tweeted on Tuesday.

Kudlow told Politico that the United States was not looking for a trade war with China and that it was not clear what action the United States would take toward ZTE.

This week’s meetings follow U.S.-China trade talks in Beijing earlier this month where the two countries failed to reach an agreement on the long list of U.S. demands.

U.S. Ambassador to China Terry Branstad, who was at the Beijing talks, said earlier on Tuesday the United States wants a timetable on how China will open up its markets to U.S. exports as the two countries are still not close to resolving trade frictions.

“VERY FAR APART”

Washington and Beijing have proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that could hurt global supply chains and dent business investment plans.

Branstad, speaking at a conference in Tokyo, said the Chinese appeared “taken back” by the significance of the list.

“The Chinese have said ‘we want to see the specifics.’ We gave them all the specifics in terms of trade issues. So they can’t say they don’t know what we’re asking for,” he said.

Branstad said China has not met pledges to open up its insurance and financial services area, as well as reduce auto tariffs, and that Trump would like to see a “dramatic increase” in food exports to China.

“We’re still very far apart,” he said.

Branstad said the United States could rescind the “Section 301” tariffs if China opened its agriculture and auto markets.

Increasing U.S. exports of liquefied natural gas could also be an area where the two countries could agree, he said.

“The United States and China are the two biggest economies in the world. The more we can work things out, the better it’s going to be not just for U.S. and China, but for the entire world economy,” he said.

(Reporting by Leika Kihara in Tokyo, and Susan Heavey and Doina Chiacu in Washington; Editing by Chris Gallagher, Darren Schuettler and Susan Thomas)

Trump says was ‘psyched to terminate NAFTA’ but reconsidered

A truck heads towards the United States at the Lacolle border crossing in Lacolle, Quebec, Canada April 26, 2017. REUTERS/Christinne Muschi

By Jeff Mason and David Lawder

WASHINGTON (Reuters) – President Donald Trump told Reuters on Thursday that he was “psyched” to terminate the NAFTA trade deal with Canada and Mexico, but changed his mind after their leaders asked for it to be renegotiated instead.

Trump said in an interview with Reuters that he will not hesitate to change course again and pull the plug on the North American Free Trade Agreement if the negotiations become “unserious.”

His comments came at the end of a long 24 hours during which Ottawa and Mexico City were whipsawed over the Trump administration’s intentions over the 23-year-old trade pact.

“You know I was really ready and psyched to terminate NAFTA,” Trump said.

He decided that it would be better to terminate the trade deal after hearing about Wisconsin farmers’ struggles with new Canadian dairy rules that were shutting out their milk protein exports.

“You saw that, you wrote about it,” Trump said. “And I said I’ve had it. I’ve had it.”

But after administration officials said a withdrawal order was being prepared, Trump said he received phone calls from Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau asking to renegotiate the pact.

“I’m not looking to hurt Canada and I’m not looking to hurt Mexico. They’re two countries I really like,” Trump said. “So they asked to renegotiate, and I said yes.”

News of the possible U.S. pullout from NAFTA rattled financial markets on Wednesday. Relative calm returned on Thursday after Trump’s comments, and the Mexican peso strengthened 0.86 percent against the U.S. dollar, while the Canadian dollar was flat versus the greenback.

Mexico, Canada and the United States form one of the world’s biggest trading blocs, and trade disruptions among them could adversely affect farm, automotive, energy and other sectors in all three countries. NAFTA removed most trade and tariff barriers between the neighbors, but Trump and other critics have blamed it for deep U.S. job cuts.

Trump campaigned for president last year on a pledge to pull out of NAFTA if he could not renegotiate better terms. The United States went from running a small goods trade surplus with Mexico in the early 1990s to a $63-billion deficit in 2016.

Asked by Reuters what would make NAFTA a fair deal, Trump said: “Open markets. Open borders for trade” and “Fairness, no government subsidies so that it makes it impossible for our people to compete.”

He added that if the NAFTA negotiations “become unserious, I will terminate.”

As Trump spoke, a new trade irritant between the United States and Canada emerged, as Boeing Co asked the U.S. Commerce Department to investigate alleged price dumping and unfair Canadian government subsidies for Bombardier Inc’s new Canadian-made CSeries jetliners.

‘GET TO WORK’

Trudeau told a news conference in Saskatchewan he had urged Trump not to withdraw from the trade pact and warned that doing so “would cause a lot of short- and medium-term pain.”

“That’s not something that either one of us would want, so we agreed that we could sit down and get to work on looking at ways to improve NAFTA,” Trudeau said.

Canada sends 75 percent of its exports to the United States. On Tuesday, Trump said he did not fear a trade war with Canada, a day after his administration moved to impose tariffs on Canadian lumber.

In Mexico City, Mexican Foreign Minister Luis Videgaray said Pena Nieto had called Trump on Wednesday and spoken with him for about 20 minutes in a conversation focused exclusively on the looming talks over NAFTA’s “renegotiation and modernization.”

Trump has accused Mexico of luring away American factories and jobs with cheap labor and other advantages enabled by NAFTA. During the presidential campaign he accused Mexico of sending rapists and criminals into the United States, and as president plans a U.S.-Mexico border wall.

One of Trump’s first major acts after becoming president in January was to pull out of the 12-nation Trans-Pacific Partnership, negotiated by his Democratic predecessor Barack Obama.

Several agriculture lobby groups in Washington were told U.S Agriculture Secretary Sonny Perdue, confirmed by the Senate on Monday, met with Trump on Wednesday evening to dissuade him from withdrawing from NAFTA.

American Soybean Association President Ron Moore said, “When you’re talking about $3 billion in soybean exports a year, any threats to withdraw from agreements and walk away from markets makes farmers extremely nervous.”

Formal NAFTA talks likely will not get started until August. The U.S. Trade Representative’s office must first send Congress a notice that starts a 90-day consultation period preceding any negotiations.

A USTR spokeswoman said the notice would not be sent until the Senate confirmed Trump’s nominee for trade representative, Robert Lighthizer.

(Additional reporting by Stephen J. Adler, Jeff Mason, Steve Holland, Susan Heavey and Mohammad Zargham in Washington, Veronica Gomez and David Alire Garcia in Mexico City, David Ljunggren in Ottawa, and P.J. Huffstutter and Mark Weinraub; Writing by David Lawer and Will Dunham; Editing by Nick Zieminski and Clarence Fernandez)