Trump eyes order that would begin withdrawal from Nafta

US President Donald Trump signs an Executive Order in the Roosevelt Room of the White House. Photo / AP

US President Donald Trump is considering notifying Canada and Mexico that he is starting the process to withdraw the United States from the three nations' North American Free Trade Agreement, three people familiar with the process said.

Trump has not made a final decision, but if he were to sign the executive action notifying the two nations, it would begin a six-month process to begin withdrawal. The notification would not require Trump to ultimately withdraw, but it is a required step if he plans to eventually do so exit the 23-year-old trade pact.

The sources said Trump had not made a final decision on the notification, but it could come within days.

Trump, who frequently criticised Nafta during his campaign, is also expected to pursue a parallel track, in which he issues a separate order notifying Congress of his intent to renegotiate the free-trade agreement.

By signing an intent to renegotiate and an intent to withdraw, the White House can attempt to leverage new concessions from Mexico and Canada while still maintaining a credible threat to leave the agreement entirely.

Exiting Nafta would be a major break from decades of US trade policy, and it's unclear whether the order would be a serious threat to leave the pact or simply an effort to put the country's neighbours on notice that Trump intends to rewrite the rules of North American trade.

Even threatening to withdraw from Nafta could heighten tensions with Mexico and Canada, close allies and trading partners.

Trump railed against Mexico repeatedly during his campaign, saying that its trade practices are ripping off US workers and luring away US jobs - adding to tensions over Trump's proposed border wall and his remarks about Mexican immigrants.

In recent days, however, he has taken a harder line with Canada, blasting a recent change in the dairy pricing policy there. And on Tuesday, the Commerce Department said it would begin charging a tariff on the import of softwood lumber from Canada into the United States, alleging Canada was improperly subsidizing its domestic timber firms.