Here's where a Mexican trade war might hit you

Here's where a Mexican trade war might hit you

Here's where a Mexican trade war might hit you

"I appreciate the President's focus on making the USA a great place to do business".

Not surprisingly Trump's tone was enough to see Mexico's president rethink a scheduled meeting. Such actions will only invite trade wars and lead to more strained relations.

Ambrose says the Canada-U.S. free trade agreement, which was the predecessor to the three-country North American Free Trade Agreement, puts Canada in a better position than Mexico.

"Given existing trade relationships, is altering the trade deal with Canada a "check and mate" when it comes to achieving this goal?" And "protection" of domestic markets and producers would result in factories reopening in the USA to do the business. A current account deficit of 3% of GDP financed, among others, by foreign direct investments of 2% of GDP, only added to the concerns.

"In contrast, the US ran deficits worth 1.8 per cent of GDP with China and 0.4 per cent of GDP with Mexico". People only trade when they feel it will make them better off. He recommended that more substantive discussions on trade should come once numerous positions in the State Department and Department of Commerce have been filled.

Having said that, warned Toronto-Dominion Bank economist Diana Petramala, Canada will have to remain on guard. Subsequently, the United States could impose more tariffs on Canadian goods. Although Nafta did not stop the decline in manufacturing output and jobs in the US, the decline has more to do with a shift to service-based economies than with the trade deal. The Dallas Fed argues that 40 cents on the dollar on imports from Mexico is actually United States content.

"For example, more than 70 per cent of exports from North Dakota land in Canada, followed by ME (47 per cent), MI (44 per cent) and OH (40 per cent)", she added in her recent study.

But, wouldn't that also affect Canada?

Ms. Cooper's research included some striking figures on what two-way trade with Canada has represented for state economies in the last five years: More than 16 per cent in MI, 12 per cent in Montana, 11 per cent in New Hampshire, 10 per cent in North Dakota and 8 per cent in IL. His efforts are injecting worrisome doubts about the future of business among the United States, Canada and Mexico.

Behind Ms. Cooper's statistics are millions of jobs on both sides of the border. Wilbur Ross, who will likely be confirmed as the U.S. Secretary of Commerce, has pointed to NAFTA rules of origin and dispute settlement provisions as areas requiring revision.

"It is hard to conceive how restricting trade flows between Canada and the US would achieve this objective", she added. And nine million American jobs are tied to trade with Canada.

Ms. Cooper's findings: The jobs of nearly 1.2 million Californians are connected to Canadian trade and investment. Complex supply chains and interdependence in the age of globalisation mean there is no trade zero-sum game.

Let's take that a bit further.

The U.S. energy deficit with Canada was a hefty $105-billion in 2015, though has since narrowed along with the drop in oil prices. "And we've had trade challenges with them in the past, and we know what they are, and I think they'll probably come after those same ones again", she said.

The legal and business communities should insist the NAFTA renegotiation between Canada and the USA focus its energies on deploying innovations to the world's most vibrant and integrated bilateral trading relationship.

The non-profit Center for Automotive Research estimates that the USA would lose at least 31,000 jobs if Trump went ahead with his threat to impose a 35 per cent tax on Mexican auto imports. The experience of the past two decades demonstrates that the opportunities to adjust trading relationships, even with a willing U.S. president, are often stymied by local politics through the U.S. Congress.

Okay, Anne Murray's Snowbird may not have been about Canadians flocking to Florida, but the term has become so much a part of our lexicon.

Trump has already ruffled feathers with Mexico, after doubling down on his plan to build a wall along the US southern border he says Mexico will pay for. "Canada border is coming", Mr. Ashworth said.

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