Canada Will Soon Face NAFTA Renegotiation

Canada won’t have much time to get ready for changes to NAFTA, as the Trump administration is pressing ahead with their goal of altering the agreement.

Speaking to media on Sunday, US President Donald Trump said, “We will be starting negotiations having to do with NAFTA. We are going to start renegotiating on NAFTA, on immigration and on security at the border.”

That short statement will draw big attention in Ottawa and Mexico City.

Both Canada and Mexico are under pressure due to the importance of the export relationship with the United States.

Mexico has already felt the effect of the incoming Trump administration – as Ford cancelled a planned auto production plant in the country. That cancellation took place even before Trump became President – with many attributing it to the pressure exerted by Trump’s tweets blasting auto companies that moved jobs outside the United States.

Canada has not yet faced direct consequences from the Trump presidency, but there is increasing fear about the uncertainty of possible changes to the free-trade relationship between Canada and our southern neighbour.

Any meaningful increase in import tariffs, or increased restrictions on Canadian exports to the United States, would seriously damage the Canadian economy – which is already growing weak due to stagnant wages, a struggling middle class, and higher taxes.

Canada also faces increased competition from upcoming US corporate tax cuts and reduced regulations, which could entice companies to invest and grow in the United States rather than Canada.

This all means that the stakes are very high for all three countries in NAFTA negotioations. Trump will need a win to show his base that he can get results and bring back jobs. Mexico will be trying to salvage their auto-sector as it comes under unprecedented pressure. And Canada will be trying to protect our favoured relationship with the US economy.

Trade negotiations useually seem quite boring, but the upcoming round of NAFTA talks promises to be incredibly consequential.

Spencer Fernando

Photo – Twitter

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