Geopolitical Futures recently conducted a Deep Dive exploration of the U.S.-Mexico trade relationship. Now, we will examine the U.S.-Canada economic relationship. First, we will take an in-depth look at one commodity upon which Canada is highly dependent: oil. Next, we will look at relative dependence in the U.S.-Canada trade relationship and explore the North American Free Trade Agreement’s efficacy from Canada’s point of view. The report reaches two conclusions. First, Canada’s economy is dependent on the U.S. economy, but despite NAFTA, Canada’s manufacturing industries cannot compete with the lower production costs available in Mexico and China. Consequently, Canada has lost its competitive advantage in the production of goods such as motor vehicles and machinery. Second, renegotiating NAFTA and a selectively more protectionist environment in the U.S. are just as much in Canada’s interest as they are in the United States’.
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