Canada preparing for possibility Trump will pull out of NAFTA

USDA  Flickr

USDA Flickr

US stocks, struggling to maintain record-setting altitude in 2018, took a firmer slide Wednesday afternoon amid a report that Canadian officials expect that President Donald Trump will announce an end to the North American Free Trade Agreement, according to a Reuters.

As word of the news spread, the Canadian dollar fell 0.8 percent to CAN$1.2567, its lowest level of the year.

General Motors Co. slid as much as 3.3% while auto-parts stocks also fell, paced by Lear Corp. down as much as 3.8% and Magna International Inc. down 4.9%. A White House official, speaking on background, said there hasn't been any change in the president's position on the North American Free Trade Agreement.

The energy group edged down 0.1 percent, although Crescent Point Energy Corp rose 4.5 percent to 10.94 Canadian dollars.

The rate on Canada's two-year government bonds declined seven basis points to 1.73 per cent, dropping from a six-year high reached Tuesday.

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Canada is increasingly convinced that U.

"The market's been too complacent regarding Nafta termination risk for too long", said Bipan Rai, a Toronto-based foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce.

The sources said they expected 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 sixth and penultimate round of talks to modernize the treaty.

- How has the market performed over the last five years? The Canadian officials said Wednesday they were not sure how Mexico would react to any withdrawal notice, but that Canada would keep negotiating after one was given. Canada is ramping up the outreach effort because "while we are doing a better job of this, and getting people's attention, we are not where we need to be", MacNaughton said. A party's withdrawal takes effect six months after it provides written notice to the other member countries.

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