NAFTA on the brink

Canada has a strong hand to play in the upcoming negotiations over the NAFTA agreement. With Canadian-US trade broadly balanced and the US reliant on Canadian energy exports, we suspect that the Trump administration will continue to focus its efforts on wringing concessions out of Mexico. Unfortunately, after previously appearing to dismiss it as too complicated, last week President Donald Trump’s spokesman appeared to offer some support for the Republican plan to make the US corporate tax border adjusted. That would have a profoundly negative impact on Canada. Furthermore, given the speed at which US-Mexico relations are deteriorating, it’s possible that Trump could still decide to withdraw from NAFTA entirely.