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There would be fairly significant immediate consequences in terms of investment decisions and production mandates for plants if negotiations fell apart Dan Ciuriak

“Everything is in play, because it depends on whether the building falls nicely in on itself without damaging surrounding buildings and you can quickly rebuild a new structure, or whether it falls into neighbouring buildings and it’s a big mess for a long time,” he said.

If NAFTA falls apart, Miller said we should know within six months to a year “whether it is devastating, relatively neutral or actually positive.”

Some economists and automotive companies, including Guelph, Ont.-based auto-parts manufacturer Linamar Corp., expect the countries to revert to the 2.5-per-cent most favoured nation (MFN) tariff set out under World Trade Organization rules.

But the 2.5-per-cent rate only applies to vehicle exports to the U.S. The truck tariff would be set at 25 per cent.

Brett House, deputy chief economist at the Bank of Nova Scotia, said about 50 per cent of Canada’s overall trade with the U.S. would be affected by the move to MFN rates, but the auto industry could be particularly impacted.

“The 2.5-per-cent tariff is not such a big deal overall, but it is a big deal for the auto sector because production is so integrated across borders,” he said, pointing out that it’s commonly believed auto parts may cross the border six to eight times during production. “The problem is if they cross that much, you are potentially compounding that 2.5-per-cent tariff multiple times.”

House expects that if the U.S. pulls out — something he thinks is unlikely — the 2.5-per-cent MFN rate may push Canada and the U.S. to negotiate a bilateral trade deal, such as the previous Canada-U.S. Auto Pact.