If the United States pulls out of the North American Free Trade Agreement, the move would definitely affect the Canadian economy. But experts say it wouldn't be devastating. Business and commercial growth would be curtailed, but not halted, according to economists.
The uncertainties as to what would actually happen in Canada if the plug is pulled on NAFTA are many, including what the next moves would be for the United States. That move would likely dictate what would happen in Canada. Boardrooms would be busy with discussions about the possible ramifications.
Instead of pulling out of the NAFTA agreement, some experts believe that a tariff tax may be imposed, which could possibly start a trade war. However, those in business believe there are two moves the United States government is more likely to make -- to allow trade between itself and Canada like it used to be pre-1994 and pre-NAFTA, which would exclude Mexico. The other is that all trade deals are killed, including one with Canada, and it is this scenario that business owners think might happen and are preparing for. That would see high tariffs between the two countries reinstated.
This is a dicey situation since companies in Canada would have to rethink their bottom lines and ascertain how they will be able to turn a profit and yet continue to compete globally. It is possible that foreign companies would reconsider doing business in Canada because of increased costs and added risks. All Canadian companies would be affected, some more than others. The unemployment rate would soar as businesses lay off workers due to stagnant growth. Canadian consumers will bear the brunt of the economic downturn by paying more for goods.
Yet, economists say it wouldn't be the end of the world -- that the Canadian business and commercial sectors would find their footing. Those with their hands in the business and commercial sectors in Canada might wish to speak with a lawyer on what they might do to protect their interests should this scenario happen. A lawyer experienced in business and commercial law will likely be able to provide some advice and guidance.
Source: msn.com, "Say Donald Trump kills NAFTA. Here's what experts say will happen to Canada: Analysis", Daniel Dale, Nov. 18, 2017