Rising odds that Trump will walk away from NAFTA ahead - Rabobank

Analysts at Rabobank note that Canada sees rising odds that Trump will walk away from NAFTA ahead: they put the chances at over 50%, and believe that US notification of withdrawal could come at any time. 

Key Quotes

 “That news follows on from Canada taking the US to the WTO over recently-imposed duties, which USTR Lighthizer called a “broad and ill-advised attack.” The immediate impact of that story was to see the implied probability of a rate hike from the BOC next week drop back markedly, for now, while both CAD and MXN came under immediate, if moderate, selling pressure. Let’s recall that the US runs a trade deficit with Canada, just as it does with China. It may not make much sense to free-trade theorists, but history shows that we are always more likely to see deficit countries walk away from trade arrangements than surplus ones (which says something important about free-trade theory when you really think about it.)”

“Trump has now said he doesn’t expect to fight a war with North Korea – which we can all agree is da bomb we should really be losing sleep over. Surely by comparison we can all live with simple trade squabbles with China, Canada, and Mexico?”