Putting the tariff impacts of a Trump termination in perspective
This report investigates the tariff impacts on Canadian exports if the U.S. Trump administration made good on repeated threats to terminate the North America Free Trade Agreement (NAFTA), forcing Canadian exporters to fall back to World Trade Organization (WTO) rules and tariff rates. The general impacts are surprisingly modest, although some sectors facing tariff peaks would be hit harder. Based on 2016 trade figures, reverting from NAFTA to WTO bound tariff rates would have resulted in, at most, $US4.2 billion in extra tariff costs (1.5% of the value of Canadian exports to the U.S. in 2016).
The report demonstrates that Canada has a stronger negotiating position in coming NAFTA talks than is often assumed and can afford to walk away from an “America First” deal if U.S. demands are too costly or unreasonable.
