Canada Faces 'Modest' Impact if US Withdraws From NAFTA



An end to NAFTA would result in $4.2 billion in additional tariff costs for Canadian exporters.

The cost to Canada if the United States were to completely end its participation in the North American Free Trade Agreement (NAFTA) would be far less grave than many have feared, according to a report by the Canadian Center for Policy Alternatives think tank on Thursday.

"If the unpredictable US Trump administration made good on repeated threats — issued as recently as April — to terminate NAFTA, reverting to World Trade Organization (WTO) rules and tariff rates would mean only a ‘modest’ speedbump for Canadian exporters," the report stated.

While a termination of NAFTA would disrupt certain sectors, such as textiles, apparel and pickup trucks, it "wouldn’t have a disastrous impact on overall Canada-US trade," the report explained.

At most, an end to NAFTA would result in $4.2 billion in additional tariff costs for Canadian exporters, or about 1.5 percent of the total value of Canadian exports to the United States, the report concluded.

Although US President Donald Trump has at times threatened to scuttle NAFTA, the primary thrust of his criticism is that the 23-year old agreement needs to be "renegotiated" to change provisions that put US companies at a competitive disadvantage.

In May, US Trade Representative Robert Lighthizer notified Congress that the United States merely sought unspecified improvements in the deal.a

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