Trump hints at NAFTA withdrawal, says Mexico will pay for wall

US President Donald Trump suggested on Monday that he could soon begin the process of terminating the North American Free Trade Agreement (NAFTA) and insisted Mexico will pay for a wall on America's southern US border.

Dialing up the rhetoric against America's southern neighbour, Trump said Mexico was "being difficult" in talks to rework the decades-old US-Mexico-Canada free trade deal and further action may be needed.

"NAFTA is one of the worst trade deals ever signed at any time anywhere in the world, and I can understand why Mexico is being difficult, because why wouldn't they be? They've had it their way," Trump said.

"I believe that you will probably have to at least start the termination process before a fair deal can be arrived at," he added, previewing hardball negotiating tactics to come.

Trump also doubled down on his insistence that "one way or another, Mexico will pay for the wall," a key campaign pledge the president is struggling to finance. 

"It may be through reimbursement," he said. "We may fund it through the United States, but ultimately Mexico will pay for the wall."

Trump is struggling to convince Congress to stump up the money needed to pay for the controversial project, and has threatened to shut down the government if they do not.

Mexico has repeatedly said it will not pay for the wall.

Trump said the construction was needed because "Mexico has a tremendous crime problem, tremendous."

"Tremendous drugs are pouring into the United States at levels that nobody has ever seen before," he added.

Arpaio pardon

Trump also defended his granting a pardon to controversial former Arizona sheriff and political ally Joe Arpaio, and criticized former Democratic presidents for their choices of people to pardon.

"A lot of people think it was the right thing to do," the Republican said of Friday's pardon of Arpaio.

Trump, during a news conference with Finnish President Sauli Niinisto, criticised actions by former presidents Barack Obama and Bill Clinton, including Obama's commutation of the final 28 years of Chelsea Manning's 35-year sentence for passing secrets to WikiLeaks in the largest breach of classified information in US history. 

US "very protective" of Baltic region

Trump said  the United States is "very protective" of the Baltics in the face of a Russian naval exercise with China in the Baltic Sea and said the US and its allies would be able to handle any threat.

"We are very protective of that region," Trump said at a joint news conference with visiting Finnish President Sauli Niinisto. "That's all I can say. We are very, very protective. We have great friends there."

A Russian naval exercise with China in the Baltic Sea has rattled tensions in the region and Trump has sought to reassure NATO allies there, sending Vice President Mike Pence on a recent trip.

Niinisto said he recently played host to Russian President Vladimir Putin in Finland and that Putin offered assurances that the Russia-China naval exercise should not be seen as a threat.

Niinisto said the United States, Finland and Sweden have also conducted training exercises in the Baltic region.

"We have to be very careful that this huge training, huge military trafficking ... does not cause any accidents or problems because we know from accidents might grow whatever," he said. 

"That is why I think it's important that we continue to work with NATO to enhance ... dialogue between Russia and NATO."

On a visit to Brussels in May, Trump's allegiance to NATO was thrown into doubt when he opted not to mention the US commitment to the NATO treaty's Article 5, which says an attack on one member is an attack on all.

He later cleared up the confusion, saying he was committed to NATO's common defence.

Trump entered office hoping for better US relations with Russia but his effort has failed thus far to bear fruit amid continuing questions surrounding Russian meddling in last year's US presidential election, something both Moscow and Trump deny.

He signed legislation early this month imposing a new round of US sanctions against Moscow.

Trump called the Baltics "a very important part of the world."

"These are all threats we will be able to handle if we have to. Hopefully we won't have to handle them but if we do we'll be able to handle them," he said.