The Fate of NAFTA: What It Means for Canada's Retail Sector

The fate of NAFTA is uncertain after six rounds of talks between Canada, the U.S. and Mexico. The report from A.T. Kearney and the Retail Council of Canada says eliminating the world’s second-largest free trade agreement would have a dramatic impact on the Canadian economy.

The conclusion is “The retail sector is likely to be particularly hard hit, and retailers need to begin thinking about how to prepare for a future where U.S.-originating merchandise does not seamlessly move across the border.”

The analysis calculates the direct impact of rising tariffs will cost Canadian retailers an extra $4 billion to $21 billion for goods, and assumed a 20% tariff on all categories that are currently tariff-free. For every 1% increase in tariffs, retailers would see their costs directly increase by at least $1 billion. This cost will be passed on to the consumer making it impossible to compete with American pricing. There will be no incentive for price sensitive Canadian consumers to shop at home.

Rise in duty-free allowance could cost hundreds of thousands of jobs in retail. Thank you to the Retail Council of Canada (RCC) for this report and understanding the potential implications of the end of NAFTA is of vital importance to retailers and the health of Canada's #1 employment sector.

The RCC will be at the NAFTA negotiation meetings in Montreal to defend the position of our retail sector in Canada. We appreciate all their efforts.

Read the full report here: