How Withdrawing from NAFTA Would Impact Canadian Trucking

Paid by: Omnitracs

There has been talk for some time that U.S. president Donald Trump could potentially pull out of NAFTA as a negotiation tactic. As a candidate and as president, he has threatened to do this on more than one occasion. The possibility of withdrawing from NAFTA could be detrimental to the trucking industry and make it unappealing for drivers to transport goods across borders.

The North American Free Trade Agreement has been in place since 1994 and this year, Canada, the U.S., and Mexico are in the process of renegotiating NAFTA. These renegotiations are well Overdue — a lot has changed in the world the nearly quarter century it’s been since NAFTA was established.

NAFTA has facilitated business in Canada, eased burdens on consumers who used to pay duties, and made shipping and receiving processes smoother. Because of NAFTA, drivers have had shorter wait times at the border and U.S. drivers don’t need passports to enter Canada. Pulling out of NAFTA would dismantle this progress.

The trade relationship between Canada and the U.S. is the second largest in the world next to China and the U.S. According to figures from the Office of the United States Trade Representative, goods and services between the two countries totaled $627.8 billion in 2016. And, according to the U.S. Department of Transportation, more than 63 percent of NAFTA freight was hauled by trucks in February 2018. NAFTA has helped streamline processes, making trade at this volume possible.

Many Canadian drivers go straight through the U.S. to Mexico. NAFTA helped improve Canada–Mexico relations, which were less than friendly back when the countries were on different sides of the Cold War spectrum. According to the government of Canada website, Mexico–Canada merchandise trade grew nine-fold and services trade increased six-fold since NAFTA was established.

NAFTA has made business in Canada more attractive to companies in the U.S. when the Canadian dollar is weak. The current conversion rate hovers around 80 cents in U.S. dollars for every Canadian dollar. U.S. companies won’t find this so attractive if NAFTA goes away and duties are added back to the price. Because Canada has a low population density compared to its total area, the U.S. carriers that already want to quickly go in and out of Canada for low-cost goods would have even less incentive to do so without NAFTA.

A number of changes in the trucking industry have made it more and more difficult to recruit and retain drivers. Withdrawing from NAFTA could worsen the driver shortage problem and send drivers who already had to deal with the inconveniences of border crossing and shipping and receiving pre-NAFTA into early retirement.

Have your say

This is a moderated forum. Comments will no longer be published unless they are accompanied by a first and last name and a verifiable email address. (Today's Trucking will not publish or share the email address.) Profane language and content deemed to be libelous, racist, or threatening in nature will not be published under any circumstances.