Canada braces for possible U.S. exit from NAFTA trade pact

Canada braces for possible U.S. exit from NAFTA trade pact

Canada braces for possible U.S. exit from NAFTA trade pact

Canadian government officials said there's an increasing likelihood US President Donald Trump will give six-months' notice to withdraw from Nafta, dragging down the loonie, yields on government bonds and Mexico's peso.

"A primary discussion point was the negative impact a withdrawal would have on economic and stock market momentum", the report said.

The auto and freight sectors are considered to be the most "at risk" in the NAFTA renegotiation talks as movement of manufacturing facilities and lower trade volume could hurt financial results and decrease productivity. It is more likely a "zombie NAFTA" will continue even if Trump pulls out, as such an action could be held up in the US court system and members of congress would have to authorize the addition of new tariffs on goods from Canada.

Canadian officials are quick to point out in their meetings with USA politicians that America has an $86 billion trade surplus with Canada, even though the US has rising trade deficits - meaning it purchases more than it exports - with many other nations, including Mexico.

Last fall, U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerMORE tried to calm concerns about a withdrawal, saying the Trump administration had every intention of completing the negotiation of an updated NAFTA with Mexico and Canada.

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Soon after the story, the Toronto Star reported that while Canada is "actively preparing" for a possible withdrawal, officials aren't "convinced" that Trump will abandon the agreement.

The Canadian dollar fell 0.9% to $1.2574 against the greenback at 3:05 Toronto.

Canadian officials, speaking to CBC News, said they are prepared for Trump to signal an intent to withdraw in six months by January's end, but no one would be astonished if he opted to keep his officials at the table.

"It's under negotiation as we speak", he said.

"On NAFTA, I am working very hard to get a better deal for our country and for our farmers and for our manufacturers", Trump said during a speech at the American Farm Bureau Federation convention in Nashville, Tenn., Monday.

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