President Trump Will Soon ‘Pull the Plug’ on NAFTA
- Loonie and Peso fall in response
Canada is convinced that US President Donald Trump will announce that the United States intends to pull out of the North American Free Trade Agreement aka NAFTA, government sources said Wednesday.
The 2 sources said they expected President Trump would make his move at about the same time that negotiators from the United States, Canada and Mexico meet in late January for the 6th and penultimate round of talks to modernize the treaty.
The Canadian and Mexican currencies both weakened against the USD after the news.
The Canadian dollar (Loonie) fell to its weakest level this year at C$1.2561 Vs USD, or 79.61c.
The Mexican peso was trading down more than 0.6% at 1925 GMT, while the S&P/BM IPC stock index was down about 1.7%.
President Trump has repeatedly threatened to walk away from NAFTA unless Canada and Mexico agree to major changes Washington says are needed to make the Y 1994 treaty more fair.
Canadian officials say if President Trump does announce a US withdrawal, it could be a negotiating tactic designed to win concessions. They also express doubt whether the US Congress would approve such a move.
Canada and Mexico have rejected most of the US proposals for NAFTA reforms, leaving officials with a big job if they are to bridge the large differences at the 23-28 January talks in Montreal.
Negotiations are due to wrap up at the end of March.