REPORT: Mexico Would Be Hardest Hit If NAFTA Collapsed

In contrast to predictions of total disaster if NAFTA ended, there are predictions that despite an economic disruption, neither Canada, the US, or Mexico would fall into a recession if the agreement was scrapped.

A new report provides a counterweight to the near-apocalyptic rhetoric surrounding the possible end of the North American Free Trade Agreement.

As negotiations get tougher, there is rising concern that the agreement could fall apart, and thought is turning to the potential impact of that scenario.

Now, Moody’s Analytics has shared their predictions about what impact that would have on the economies of Canada, the US, and Mexico.

As noted by Bloomberg, “An increase in duties would potentially hurt growth, cost jobs and spur inflation for all three nations with Bloomberg Intelligence and Moody’s Analytics predicting Mexico would be the hardest hit. But none of the countries would be tipped into recession, according to Moody’s. It forecasts most of the pain would come in the first two years after the breakdown of the deal, assuming the U.S. and Canada would work out a bilateral arrangement.”

The Chief Economist at Moody’s Analytics – Mark Zandi – says, “It will be bad for business, but it wouldn’t be cataclysmic. It will be disruptive to supply chains.”

Mexico is estimated to lose 1 million jobs, while the US would lose 250,000, and Canada would lose 125,000. However, that estimate does not include the possibility that Canada and the US would resurrect the Canada-US Free Trade Agreement, which would bring the jobs loss numbers down dramatically for Canada & the US. Mexico would take a big hit to their automotive sector – though it should be noted that Mexico’s automotive success has often come at the direct expense of jobs in Canada and the US.

Clearly, there would be a short-term disruption from the end of the NAFTA. However, Canada’s economy would survive, and it is likely that we would sign a deal with the US. Additionally, if we took actions to lower energy prices, reduce regulations, eliminate the carbon tax, and cut taxes, we could strengthen our domestic economy, build up the energy industry, and expand our exports. With those policies in place we could even gain back massive amounts of jobs in the automotive sector and other manufacturing industries. That’s why Canada’s economic “leaders” should spend less time panicking about NAFTA, and more time strengthening our economy here at home.

Spencer Fernando

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don morris

Bringing our jobs back from whence they fled,to Mexico,in the 80’s and 90’s can’t be anything but positive for Canada. It was estimated Ontario lost 500,000 manufacturing jobs in the two decades, to be replaced by service sector jobs and not much else. Free Trade was another smoke and mirrors show designed to allow corporations to move their profits to another Country and pay tiny taxation,with no environmental standards or employee benefits to hinder the profit making. I hoe Trump DOES “blow up” NAFTA, it was not designed for the average worker,but the billionaire elites. Maybe a new deal will… Read more »

Clive Edwards

Under NAFTA the US plays Canada off against Mexico, with US global corporations the clear winners. The Canadian and Mexican establishments get bought off, too. Average Canadians, Mexicans and especially Americans are the big losers. Scrap all “global” trade agreements. Everything should be flexible and bi-lateral. It’s the only way to keep a leash on the globalists.