A pro-growth North American Free Trade Agreement can be "incredibly important" to the U.S. economy, Rep. Kevin Brady, R-Texas, told CNBC on Wednesday.
"I've worked on a lot of trade agreements. I think there's 'close enough' here. I think they ought to be able to close this out in the months ahead," said Brady, who has been involved in a dozen free-trade negotiations and traveled to Mexico earlier this year to meet with NAFTA negotiators.
Tensions have been rising since the U.S. slapped steel and aluminum tariffs on its neighbors to the North and South. Mexico and Canada have both promised retaliatory tariffs.
Then last weekend, President Donald Trump refused to sign a G-7 communique, lashing out at Canadian Prime Minister Justin Trudeau for a perceived slight during a speech following the meeting of the Group of Seven leaders.
Brady, chairman of the House Ways and Means Committee, believes it's "critically important" an agreement is reached this year so Congress can vote on it next year.
"We think there are some big wins for the U.S. economy in a new NAFTA," he said on "Power Lunch."
Trump has repeatedly threatened to pull out of the 1994 agreement. Earlier this month, the president said he "wouldn't mind" making separate trade deals with Canada and Mexico. White House economic advisor Larry Kudlow doubled down a few days later by saying Trump was "very seriously" considering separate negotiations.
Brady thinks the strength of the U.S., Canada and Mexico combined will help the countries compete "anywhere" in the world, including against China.
Meanwhile, Congress is also trying to work with Trump on focusing the tariffs on China, not "fair" trading partners, he said.
"Especially now with tax reform, we're seeing a growing economy, demand for new workers. We think there's a demand for more customers," he said. "Free trade done right can help us grow this economy in a major way."
When the tariffs were announced in March, the House Ways and Means Committee released a letter signed by 107 Republican U.S. representatives urging Trump to trim down his proposals. While Trump ended up giving temporary exemptions to Canada, Mexico and the EU, he imposed the tariffs when those exemptions expired in May.