IMF Cuts Canadian Growth Projections Amid USMCA Limbo


Concern over the future of the United States-Mexico-Canada Agreement (USMCA), also known as the ‘New NAFTA’, is mounting. Despite having been signed last November, the long-awaited successor to the $1.1 trillion trilateral trade agreement still has to be ratified.

And ratification is easier said than done…

Both Canada and Mexico have refused to ratify the newly revised USMCA without the removal of Trump’s tariffs on steel and aluminum. In an expression of lost patience over these tariffs, the Canadian government recently announced plans to levy additional tariffs on U.S. products.

Steel and aluminum tariff wars aside, the U.S. has its own set of challenges in the road to ratification.

While some American lawmakers hope to pass the USMCA through Congress this summer, the Trump administration now faces strong opposition from a Democrat-controlled House—a fact that is only likely to further delay the USMCA’s ratification process.

But with elections in both the United States and Canada looming, the clock is ticking…

Via CBC,

“If ratification [of the USMCA] is delayed much longer, it could become hostage to electoral politics.

The United States has its next presidential contest in 2020, and Canada holds a federal election in October.”

With all this in mind, it’s no wonder why the International Monetary Fund (IMF) chose to reduce its GDP growth estimate for Canada. For well over a year now, the IMF has warned World Economic Outlook (WEO) readers about the potentially adverse economic effects of the USMCA’s limbo.

Via Financial Post,

“The IMF cut its growth estimate for Canada to 1.5 per cent in 2019, down from its previous estimate of 1.9 per cent growth in January, according to its World Economic Outlook report published Tuesday.”

Published by the International Monetary Fund between two to four times a year, the World Economic Outlook (WEO) report is a survey that analyzes economic developments during the near to medium term. These reports are often looked to for a general consensus on the direction of the world’s economy.

USMCA Reaching A Political Inflection Point

An all too familiar uncertainty is gripping North American trade once again. However, with both U.S. and Canadian elections drawing near, the incumbent administrations will be forced to act far quicker than ever before—creating an inflection point of sorts for the USMCA.

But while inflection points guarantee change, they may not always bring the change that you want…