According to a report by the Scotiabank, with the escalating US protectionist measures and counter measures by Canada and Mexico, North America has the risk of all its economies getting “knocked into a recession.”
In the worst-case scenario, the report estimates that Canada’s economy may shrink 1.8 percent in 2020 while the US could contract 0.1 percent in 2020. $12.4 billion is the value of Canada’s steel and aluminum exports to the US in 2017 compared to Mexico’s $2.9 billion and EU’s $7.7 billion. The report estimates a reduction of 0.4 percent to Canada’s GDP in 2020 if NAFTA dies and 3.8 percent tariffs are imposed across all goods. While the effect on Mexico’s economy was not measured and published by the Scotiabank, the loss of import and export with the US is expected to dampen the economy’s previous growth potential of 2.96-3.04 percent between 2019 and 2020. The Trading Economics website has updated Mexico’s economic GDP growth rate to 1.4-1.5 percent for 2019 and 2020 but warns of further growth erosion if NAFTA ends.