Provinces that rely heavily on NAFTA and cross-border activities would be harder hit than the Canadian economy as a whole should the free trade deal collapse, according to a new report from Moody's.

The ratings agency singled out New Brunswick and Ontario as having the highest exposure in terms of trade with NAFTA partners based on their "output and export mix."

It said that of all the provinces,New Brunswick's exports to the U.S. account for the largest share of its gross domestic product — nearly 30 per cent overall — with "significant exposure to higher-risk" food, agricultural commodities and forestry sectors.

Meanwhile, Ontario exports more to the U.S. than any other province, largely because of its significant exposure to the manufacturing industry, including the auto sector.

That could be a hindrance if the border tightens up, and Canadian companies have to deal with obstacles like tariffs.

"For these provinces, NAFTA termination could lead to weaker economic activity resulting from lower revenues and potentially higher expenditures," the report said.

"The fiscal capacity to address these pressures is challenged by both provinces' relatively high debt burden and anticipated continued budget deficits."

Alberta would fare better

Given that more than a fifth of Ontario's GDP is exported to the U.S., one might imagine that Alberta would be hit hard by the end of NAFTA. But the Moody's analysis calculates that the energy-reliant province could actually be less at risk from a NAFTA breakup, according to Moody's.

That's because Moody's says it's unlikely a NAFTA termination would result in "significant" new tariffs for non-renewable natural resource exports — which is exactly the sort of stuff that Alberta sells to the U.S.

"Assuming that the MFN (Most Favoured Nations) tariffs apply in case of a NAFTA termination, these tariffs are typically low for nonrenewable resource products," Moody's said.

The report took note of the current administration's favourable view of energy projects, including its approval of the long-delayed Keystone XL pipeline

"We believe Alberta's credit profile would be relatively insulated from NAFTA termination risk," Moody's said.

Other big natural resource exporters, such as Saskatchewan and Newfoundland and Labrador, could expect similar treatment, and as such would not be as hard hit in the event NAFTA ends, Moody's said.

'Marginal' impact on Canada overall

While the end of NAFTA would be worse for Canada than for the U.S., Moody's said, the impact on Canada's overall economy would be "marginal" — although there would be winners and losers in terms of different industries and regions of each country.

"We expect the U.S. and Canadian economies would only be marginally affected," Moody's said. "However, sector- and

company-level impacts would vary, as certain industries would have to adjust to higher barriers to trade."