Trump ready to bolt NAFTA: report

WASHINGTON - US President Donald Trump is considering issuing an executive order to pull the United States from the North American Free Trade Agreement, a senior administration official said on Wednesday, a move that could unravel one of the world's biggest trading blocs.

The news, first reported by politico.com shortly before midday, rattled financial markets and could raise tensions ahead of negotiations to update the NAFTA pact between the United States, Mexico and Canada.

Mexico's peso and Canada's dollar spiraled lower against the US dollar, with the peso shedding about 1.5 percent in just over an hour, while Canada's "loonie" lost about 0.45 percent.

Stocks in both US neighbors also weakened, with Mexico's benchmark IPC index .MXX falling more than 1 percent in 15 minutes.

A disruption in trade between the three NAFTA partners could wreak havoc in the auto sector and other industries, hitting profits at companies that have benefited from zero-level tariffs and Mexico's relatively low labor costs.

Scrapping NAFTA also would hit US farmers, whose exports to Mexico have grown under NAFTA.

Trump has repeatedly vowed to pull out from the 23-year-old trade pact if he is unable to renegotiate it with better terms for the US. He has long accused Mexico of depleting US jobs. The United States went from running a small trade surplus with Mexico in the early 1990s to a $63 billion deficit in 2016.

Trump has stopped short of a formal threat to kill NAFTA so far, but legal experts say he likely has the authority as president to give a 60-day notice that America is leaving the pact.

Details about the draft order on NAFTA were not immediately available.

But Trump has faced some setbacks since he took office in January, including a move by courts to block parts of his orders to limit immigration. Withdrawing from NAFTA would enable him to say he delivered on one of his key campaign promises, but it also could hurt him.

"Mr. President, America's corn farmers helped elect you," the National Corn Growers Association said in a statement. "Withdrawing from NAFTA would be disastrous for American agriculture."