Good Afternoon,

late Sunday joined a reworked, trilateral NAFTA replacement deal. While the United States-Mexico-Canada agreement came somewhat sooner than we were expecting, the details we’ve seen so far point to an outcome with few surprises. The concessions that Canada made, such as on rules of origin in the auto sector and in granting the U.S. more access to the domestic dairy market, had been well telegraphed. And even some of Canada’s wins, like getting an exemption from potential U.S. auto tariffs, weren’t surprising. While it’s possible to conclude that the deal consists largely of tweaks to the old agreement, we believe reduced uncertainty about the U.S.-Canada trade relationship could prompt businesses to put more investment dollars to work and will support exports. Overall, however, the new deal doesn't much change our base-case economic outlook. And we believe the USMCA won’t alter the Bank of Canada’s thinking on the pace and extent of future interest rate hikes.

Link to the report

To view, print and download the new report, click here: