Canadian Press
There is a chance that U.S. President Donald Trump will pull out of the North American Free Trade Agreement (NAFTA), Canadian government sources told both Bloomberg and Reuters on Wednesday.Canada, the United States, and Mexico are due to meet in late January in Montreal for the sixth and final round of NAFTA negotiations. And sources say that’s likely when Trump will pull the plug.According to Bloomberg, repeated threats to exit from NAFTA now exceed 50 percent.Trump’s threats to pull out of NAFTA have been a consistent part of his campaign, and indeed his presidency. “This is exactly the sort of negotiating tactic that we would anticipate from the White House,” Brett House, Deputy Chief Economist at Scotiabank, told VICE Money.“There is a possibility government sources have additional information, but from everything I’ve seen so far, we don’t really know what’s going to happen at the next round of talks.”The Canadian dollar fell slightly against the U.S dollar just after 3pm today after the news reports.“It’s possible the White House is just ratcheting up pressure and inducing panic in the markets ahead of January 23,” said House.Although Canada is indeed the most important trading partner for 35 U.S. states, there are only two U.S. states — Michigan and Vermont — where trade with Canada exceeds 10 percent of their economic output. In contrast, almost 50 percent of Ontario’s gross domestic product depends on trade with the U.S.; for Quebec it’s 23 percent, for Alberta, 31 percent according to data from the U.S. Census Bureau.If the U.S. announces its withdrawal from NAFTA, that does not automatically imply that the deal is dead. Under Article 2205 of NAFTA, any of the three countries can pull out with six months notice — the said country can then decide to rejoin NAFTA after the six months.“Canada has done a good job of cultivating a relationship with Trump,” House said. “We’ve responded well so far to any attempts to bait us into saying something extreme.”
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