NAFTA talks will spare North American energy trade

Significance

As a new round of talks over the North American Free Trade Agreement (NAFTA) looms, the region’s booming energy trade is in the spotlight. Trump’s hard-line rhetoric around the 1994 free trade deal has raised concerns that he will undermine trade between North American nations, which created huge opportunities for energy producers in Canada, Mexico and the United States.

Impacts

• Political uncertainty will dissuade cross-border pipeline investment until greater clarity on US policy is forthcoming.
• US oil and gas producers and refiners’ reliance on external markets will grow, especially Canada and Mexico.
• A slowdown in US oil imports from Canada would aid other heavy oil suppliers such as Venezuela and Iraq.
• Canadian and Mexican exporters will benefit from Trump-driven fluctuations of the Canadian dollar and Mexican peso.