The Impact of a NAFTA Dissolution on Canada’s Economy
The Conference Board of Canada, 20 pages
March 9, 2018
This briefing describes the economic impact of terminating the North American Free Trade Agreement.
- If NAFTA is terminated, we assume that Canada will return to most favoured nation (MFN) tariffs under World Trade Organization agreements.
- MFN tariffs would average 2.0 per cent on Canadian exports and 2.1 per cent on U.S. imports. For some goods, such as trucks, tariffs would be significantly higher.
- Tariffs would make Canadian exports less competitive and increase the price of imported goods.
- In the year following the resumption of MFN tariffs, Canada’s GDP would fall by 0.5 per cent and the economy would lose about 85,000 jobs.
- Canada’s reduced ability to attract investment based on secured access to the U.S. market could result in an even worse long-term economic impact.