Ending NAFTA would trim less than one per cent off Canada’s economy: two studies
WASHINGTON — Canada’s economy would lose less than one percentage point if President Donald Trump makes good on his threat to rip up the North American Free Trade Agreement, say two new studies that suggest ending the trade treaty would do minor damage.
The total impact of ending NAFTA and reinstating tariffs would trim 0.7 to 1 per cent off Canada’s GDP according to a Bank of Montreal study, while another study by the former head of computer modeling for Canada’s foreign-affairs ministry puts the damage at 0.55 per cent.
Both studies’ authors agree these findings carry a lesson for Canadian negotiators: they can bargain with confidence and not feel pressured to sign a bad deal, because the end of NAFTA is far from a total scare scenario.
The damage would be much smaller than the financial crisis of 2008; smaller even than the impact of the soaring loonie of the late 2000s; and would be roughly comparable to the national effect of the 2015 oil-price plunge, says BMO’s chief economist.