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Next week, the next round of negotiations between Canada, Mexico and the United States on the future of the North American Free Trade Agreement resume in Montreal. Rumors are swirling that if talks don’t go well, a frustrated Donald Trump may move forward with his threat to pull the United States out of NAFTA. That’s the doomsday scenario for the economies of all three nations.
NAFTA has more than tripled trade in the region to $1.2 trillion and the resumption of tariffs could put these exchanges in jeopardy. Just the hint of a U.S. exit from the trade agreement last week led to a selloff in Canadian and Mexican currencies. Financial experts believe that an American withdrawal could mean an overnight stock selloff of 5 percent or more, thus reversing some of the giant gains since the December passage of the Trump tax cut.