After the White House let it be known yesterday that the administration was readying an executive order that would terminate U.S. participation in the North American Free Trade Agreement (NAFTA), Mexico and Canada agreed to renegotiate the treaty.

Reuters:

The White House said Trump spoke by telephone with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau and that he would hold back from a speedy termination of NAFTA, in what was described as a "pleasant and productive" conversation.

"President Trump agreed not to terminate NAFTA at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries," a White House statement said.

"It is my privilege to bring NAFTA up to date through renegotiation. It is an honor to deal with both President Peña Nieto and Prime Minister Trudeau, and I believe that the end result will make all three countries stronger and better," Trump was quoted as saying in the statement.

The Mexican and Canadian currencies rebounded in Asian trading after Trump said the U.S. would stay in NAFTA for now. The U.S. dollar dropped 0.6 percent on its Canadian counterpart and 1 percent on the peso.

The White House had been considering an executive order exiting NAFTA as early as Trump's 100th day in office on Saturday, but there was a split among his top advisers over whether to take the step.

During his election campaign Trump threatened to renegotiate NAFTA and in the past week complained bitterly about Canadian trade practices.

It was under an executive order signed by Trump on Jan. 23 that the United States pulled out of the sweeping Trans-Pacific Partnership trade deal.

News of the potential presidential action to withdraw from NAFTA earlier drove the Mexican and Canadian currencies lower.

An executive order of U.S. withdrawal from NAFTA would have triggered a formal process with a timetable for completion.  The fact that Mexico and Canada both agreed to renegotiate means that renegotiations can take place in a far less stressful atmosphere, with no deadlines.  Of course, the president will have that executive order in his back pocket if he feels he needs it.

From his campaign rhetoric, President Trump is going to want more than cosmetic changes or tweaking to the deal.  By most estimates, NAFTA has harmed U.S. manufacturing, including the automotive, textile, computer, and electrical appliance industries, although it has benefited export industries like agriculture.  Depending on which measurement you use, NAFTA has created 2-5 million jobs in the U.S. alone.  It has quadrupled trade and spurred economic growth.

But the nearly 800,000 manufacturing jobs lost have helped hollow out the middle class.  Overall, it's a matter of debate whether NAFTA has been a plus or a minus for the U.S. economy.  It largely depends on what part of the country you live in and the industry in which you are employed.

Can renegotiation save or even bring back manufacturing jobs to the U.S.?  The president thinks so.  He will get a good chance to prove that in the next few months as trade representatives from the U.S. and our closest neighbors sit down to discuss changes to this pivotal deal.