The Impact of a NAFTA Dissolution on Canada’s Economy

The Conference Board of Canada, 20 pages, March 9, 2018
Briefing by
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This briefing describes the economic impact of terminating the North American Free Trade Agreement.

Document Highlights

  • 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.

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