REPORT: Loonie Could Fall 10% If NAFTA Crumbles

JPMorgan details potential impact of ‘worst-case’ NAFTA scenario.

An analysis by JPMorgan says the collapse of NAFTA would have a significant impact on the Canadian Dollar, causing it to fall by as much as 10%.

As reported by Bloomberg, the bank says “A U.S. withdrawal would likely entail 25 percent tariffs on autos and dairy, disrupting supply chains and forcing the Bank of Canada to slash interest rates, according to analysts including Daniel Hui.”

In their report, the analysts said “The worst-case NoFTA could mean USD/CAD at 1.43 as the market prices a ‘safety-net’ 50bp cut by BoC. A potential overshoot would also probably be unbound and thus larger versus the best-case scenario, given the large unknowns.”

Of course, there is also the fact that economic shocks are often unpredictable, leading to a cascade of failures at multiple points in the system, meaning the crumbling of NAFTA could be even worse than the worst-case scenarios predict.

With negotiations between Canada and the U.S. not going anywhere, the Trump Administration continues to express a willingness to move ahead with a Mexico-only deal.

Spencer Fernando

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Ed PEEBLES

BUT HOW MUCH WOULD THIS COST THE USA ?

Juan Galt

The NAFTA deadline is Sunday, September 30th. Judging by Trump’s dismal of Trudeau at the UN yesterday, I would say auto tariffs will be implemented within the next two weeks.

And if Trudeau/Butts/Freeland think Trump is bluffing on tariffs, they should take a look at China.

Gonzo the Magnificent

My bet is, this is what it will take to insure Trudeau is removed. Any thing les than a sesmic affect on the economy in Ontario, will keep him in power with a minority propped by the NDP and Greens sending Canada even further to the left.

Sewer Rat

I have no idea how our dollar is still so high with that bunch Gumps screwing this whole country up. Usually, when a government is stupidly putting people out of work, and making investment undesirable, their currency drops. The libs must be doing something to prop it up. It makes no sense whatsoever.

doug

The dollar is already 1.31-1.35 depending on the bank & the day. Another 10% will pit it past where his ‘dad’ pet pushed it to.
When will people see the damage he is doing? How much more will they cry about when food that is imported costs even more? Sure glad the east are happy with their stupidity in electing this waste of skin.