Canada: Trying to find common ground on the US demands on NAFTA - Rabobank

Analysts at Rabobank explain that NAFTA renegotiations started again this week and it seems that Canada is trying to find common ground on the US demands for the sunset clause and rules of origin.

Key Quotes

“Earlier, Canada and Mexico showed concern that the US would be willing to withdraw from NAFTA. In a hard NAFTA breakup scenario, Canada and Mexico would take the heaviest losses in terms of gross domestic product (GDP) up to and including 2025. The two countries would lose 2% and 2.6% respectively when compared to a situation where NAFTA remains in place (our benchmark scenario).”

“For Canada, economic growth in 2019 would fall to 0.2% compared to an expected growth rate of 2.0% in our benchmark scenario. The US would face total GDP losses of 1%. US economic growth in 2019 would drop to 1.6% compared to an expected growth rate of 2.2% in our benchmark scenario. This implies that any positive impact from the recent tax cuts could be wiped out completely by a trade conflict with the two neighboring countries that have become integral parts of US supply chains.”