Trump plays hard ball on new NAFTA deal
Donald Trump has decided to renegotiate the North American Free Trade Agreement (NAFTA) which has been in operation for over twenty- three years.
Trump believes Mexico and Canada have benefited from the agreement, but hasn’t been as lucrative as it should be for the United states. Trump believes NAFTA was a disaster and went as far as to say it is “the worst trade deal in history.”
Mexico, Canada and the US have now sat down to renegotiate the treaty. Many believe the negotiations are destined to failure and if this is the case it will hit the Canadian Dollar hard.
The implications for Canada should NAFTA cease could catastrophic and should not be underestimated. It would effect both imports and exports. Negotiations have been extended into the new year but many are not taking the threat of a break down in talks seriously enough. Current market conditions would say the potential for a break up is not factored in. Which means there could be substantial fall in CAD value.
Current opinion is that Trump and his negotiations team appear to be hell bent on making the talks fail. They are asking outrageous demands which would greatly reduce the benefits of NAFTA to Canada and Mexico. The US also wish to have a sunset clause which comes into play after five years which would allow renegotiations. If you are selling Canadian Dollars it may be wise to take advantage of current levels.
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