It looks like the best thing Canada is going to get out of Trump’s presidency is a more nuanced understanding of politics. Next on the agenda: NAFTA. On Thursday, Trump’s administration delivered a letter to congress making the NAFTA renegotiation he’s been talking about since the election official.
For a lot of us this begs the question: what the heck is NAFTA and why should I care? Well, here are the basics you as a Canadian need to know.
What on earth is NAFTA?
NAFTA is the North American Free Trade Agreement which was signed into existence by Brian Mulroney (Canada), George H.W. Bush (United States) and Carlos Salinas (Mexico) on December 17, 1992. The agreement essentially eliminated tariffs on goods over a period of time to make trading easier among the three North American countries.
What does NAFTA mean to Canada?
Short answer: a whole lot. Honestly, Canada is a lot more dependent on trade with the U.S. than they are on trade with us. On average, provinces rely on the United States for over 30% of their trade (Ontario is a whopping 49%). Comparatively, there are only two states where trade with Canada accounts for more than 10% of their overall economic output. So yeah, Canada may be in trouble if our trade with the U.S. becomes more limited. Big trouble.
What do we know right now?
Well, the wheels have been put in irreversible motion for a renegotiation of NAFTA. The letter Trump sent to congress starts a 90-day preparation period for the countries which ends on August 16th. During that time, the countries will formulate their plans and choose who their negotiators will be. Plan formulation will include figuring out what they are willing to give up in the agreement and what they absolutely cannot.
What could happen?
Trump is already singing a different tune than he was during the election (surprise, surprise) so we’re not facing an elimination of NAFTA like he promised then. Since talking to Trudeau in April, the president has taken a more moderate approach and suggested renegotiating rather than scrapping NAFTA. That seems like a good thing.
What isn’t a good thing is the ‘America First’ rhetoric that has been Trump’s bread and butter since the early days of his presidential campaign. That hasn’t stopped since he took the presidency. He’s since talked about how both Canada and Mexico have taken advantage of the United States and framed both countries (Canada less so than Mexico) as threats to American economic success.
Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!
— Donald J. Trump (@realDonaldTrump) April 25, 2017
As of right now, we don’t know much about Canada or Mexico’s tactics for the negotiations. The Canadian government is certainly cautious about what this renegotiation might mean for the country but it is still too early to tell exactly what they are going to be negotiating for. One thing is certain: we’ll know in 90 days.