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Should the U.S. follow through on threats to withdraw from the North American Free Trade Agreement, the Canadian dollar would absorb much of the blow.

That’s the view of JPMorgan Chase & Co., who forecast that the loonie could crumble nearly 10 per cent against the dollar in the worst case “NoFTA” scenario. A U.S. withdrawal would likely entail 25 per cent tariffs on autos and dairy, disrupting supply chains and forcing the Bank of Canada to slash interest rates, according to analysts including Daniel Hui.

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“The worst-case NoFTA could mean USD/CAD at 1.43 as the market prices a ‘safety-net’ 50bp cut by BoC,” they wrote in a Sept. 21 note. “A potential overshoot would also probably be unbound and thus larger versus the best-case scenario, given the large unknowns.”