If the United States decides to leave NAFTA it would be "especially bad" for Windsor-Essex, but border expert Bill Anderson says Canada is talking tough and pushing back hard in trade negotiations.
The head of the University of Windsor's Cross-Border Institute said reports the U.S. is increasingly likely to leave the agreement are an attempt by President Trump to get an upper hand during the sixth round of trade talks.
"It's a way of putting more pressure on the other two parties to get them to negotiate, in his mind to get them to come around to his way of thinking," explained Anderson.
He added even if the U.S. does announce it plans to pull out, that may not be a final decision and the action would not be immediate.
"It doesn't mean they will [leave]. It's not like Brexit where they invoke something and they were going to go," Anderson said. "It means in six month's time as the negotiations go forward at any point they could walk away from the table and say 'That's it. We're out.'"
News that the U.S. might leave NAFTA caused Canadian stocks and the dollar to fall Wednesday and Canadian Foreign Affairs Minister Chrystia Freeland said the government is taking the threat seriously.
"I think it would be very bad for Canada as a whole. I think it would be especially bad for this region because we're so closely integrated into the U.S. economy," said Anderson.
The trade agreement is also used to set up the framework for the structure of visas for people who work in the United States and forms used for customs, meaning the impact of a U.S. departure would trigger a "tremendous adjustment period," he added.
NAFTA used as a scapegoat
While area auto parts suppliers have been enjoying a streak of good business, the border expert said many U.S. manufacturers don't consider the current situation when they evaluate the impact of NAFTA.
"I think NAFTA has a long history of being used as a scapegoat for all economic problems, especially around industrial areas in the United States."
But Canadian negotiators are not sitting idly by while Americans try to push it around, Anderson insisted. The recent move to launch a wide-ranging trade dispute citing almost 200 examples of U.S. wrongdoing is evidence Canada is "pushing back very, very hard now," he said.
"It's a pretty cheeky move, it's not appreciated by the U.S. negotiators, but it is showing a desire to get tough on the Canadian side."