Trump says he "would rather not have" his North American trade deal

President Trump on Wednesday said that he would "rather not have" the North American trade agreement that was negotiated during his first term.

Why it matters: The free trade pact that binds North America is up for review next month. The risk of the deal collapsing now appears greater than before.

What they're saying: "I'm thinking about maybe we won't be able to make a deal. I would rather not have the USMCA," Trump told reporters in Paris, referring to the U.S.-Mexico-Canada trade agreement.

• "I'd rather leave it unsigned, I'd rather have it terminated," the president said — though he added that he "may sign it."
• "We do better as a country if we don't have an agreement."

Between the lines: An implosion of the deal could be disastrous for key industries that depend on the free flow of parts across the northern and southern borders.

• Companies have spent years pouring money into North American-based supply chains to produce goods — including automobiles — for a more affordable price.

The intrigue: The mandatory joint review of the USMCA requires the three countries to decide by July 1 whether to extend the agreement for another 16 years.

• Many expect the nations will blow past that deadline since major talks have so far included only Mexico, without Canada at the table.
• If that's the case, the deal remains in force but automatically enters a period of annual reviews.

Yes, but: The consequences of that would be less severe than a total withdrawal.

• Trump negotiated the USMCA during his first stint in office as a replacement for NAFTA, which connected the three economies in 1994.
• "The primary reason I wanted [the USMCA] was because there was no way out of NAFTA, which was the worst trade agreement ever made," Trump told reporters on Wednesday.

Zoom in: U.S. and Canadian officials have traded harsh words over trade in recent months.

• But Canadian Prime Minister Mark Carney, among the global leaders present at the G7 summit in France, recently called for a "Fortress North America," hinting at the importance of the trade deal.

The bottom line: The USMCA is a major reason Trump's trade war has caused less economic damage than economists forecast, with much of U.S. trade shielded from tariffs under the deal.

• Trump is signaling a willingness to blow up the pact — a sign that economic-related trade risks remain on the horizon.