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Donald Trump says terminating NAFTA would yield the ‘best deal’ in renegotiations

U.S. President Donald Trump arrives for a Congressional Gold Medal ceremony honoring former Senate majority leader Bob Dole (R-KS) on Capitol Hill in Washington, U.S., January 17, 2018. REUTERS/Joshua Roberts

U.S. President Donald Trump on Wednesday said that terminating the North American Free Trade Agreement would result in the “best deal” to revamp the 24-year-old trade pact with Canada and Mexico in favor of U.S. interests.

Lawmakers as well as agricultural and industrial groups have warned Trump not to quit NAFTA, but he said that may be the outcome.

“A lot of people are going to be unhappy if I terminate NAFTA. A lot of people don’t realize how good it would be to terminate NAFTA because the way you’re going to make the best deal is to terminate NAFTA. But people would like to see me not do that,” he said.

READ MORE: Justin Trudeau remains optimistic on NAFTA: ‘We know that there is a good deal to be had’

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Trump‘s comments come less than a week before trade negotiators from the United States, Canada and Mexico meet in Montreal for the sixth of seven scheduled rounds of negotiations to update NAFTA.

The talks are viewed as pivotal for the success of the NAFTA renegotiation effort because major differences remain over aggressive U.S. demands on autos, dispute settlement and a five-year sunset clause — proposals that some business groups have labeled “fatal.”

Trump discussed NAFTA and other trade issues last weekend in Florida with U.S. Trade Representative Robert Lighthizer, who is leading the U.S. negotiating strategy.

Trump‘s comments appeared to validate concerns voiced last week by Canadian government sources that the U.S. president, now a year in office, looked increasingly likely to announce a pullout from NAFTA..

Canadian Foreign Minister Chrystia Freeland added that U.S. threats to quit NAFTA had to be taken seriously.

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WATCH: Canada on NAFTA: “prepared for any eventuality”

Click to play video: 'Canada on NAFTA: “prepared for any eventuality”' Canada on NAFTA: “prepared for any eventuality”
Canada on NAFTA: “prepared for any eventuality” – Jan 11, 2018

The Reuters interview with Trump also reversed gains on Wednesday in Mexico’s peso, which has been highly sensitive to NAFTA withdrawal talk.

But Trump told the Wall Street Journal last week that he would be “a little bit flexible” on the withdrawal threat.

READ MORE: Bill Kelly: Is Canada’s NAFTA long game paying off?

Farm state lawmakers have been making the case to Trump in recent weeks that a NAFTA withdrawal could cause a major tariff increase on U.S. corn and other crops sold to Mexico, hurting a major political support base for Trump in the rural United States.

On Monday, automakers from Detroit and around the world urged the Trump administration not to quit NAFTA and to back away from some of its demands in the negotiations.

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