GOP Texas governor to Trump: US needs NAFTA as part of a 'reasonable trade policy'

  • Gov. Greg Abbott urges President Trump to implement a U.S. trade policy that won't hurt The Lone Star State's economic growth.
  • "What is good for the Texas economy is going to be essential for the American economy," argues Abbott.

Republican Texas Gov. Greg Abbott urged President Donald Trump on Tuesday to implement a U.S. trade policy that won't hurt The Lone Star State's economic growth.

"If the president wants to have a good economy for the United States of America, he needs to have a reasonable trade policy that will be good for Texas," Abbott told CNBC's Scott Cohn in an interview on "Squawk on the Street."

"What is good for the Texas economy is going to be essential for the American economy," he added.

Abbott sent a letter to the Trump administration in April, emphasizing the importance of NAFTA.

Trump has threatened to end the trade pact with Canada and Mexico if a more favorable deal for the U.S. could not be reached.

Abbott said Tuesday that he broke with Trump on NAFTA because the president's proposed actions would hurt his state, which relies heavily on exports.

"Texas is No. 1 in the nation for exports. Our leading export partner is Mexico and second is Canada. We need robust trade," said Abbott, adding the state is diversifying its economy and will be "less tethered" to oil and gas.

Abbott expects Texas will have "robust" growth this year but it may be "tempered" due to trade issues.

Texas, home to 39 companies in the Standard & Poor's 500 index, including AT&T, Exxon Mobil and Texas Instruments, claimed the top spot in CNBC's 2018 America’s Top States for Business rankings.

With solid economic growth last year — including a torrid 5.2 percent state GDP increase in the fourth quarter — Texas also finished first in CNBC's economy category.

That was up from No. 25 in the previous year's ranking, when oil was trading in the mid-$40s per barrel. The U.S. benchmark, West Texas Intermediate crude, cracked the $70 per barrel level late last month.