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The shredding of the North America Free Trade Agreement would reduce Canadian GDP growth by one per cent over five to 10 years, a prospect that looks increasingly likely as the White House slaps hefty duties on some Canadian exports, a new report says.

Analysts at Royal Bank of Canada estimate that shredding the trade pact would result in a four per cent across-the-board increase in tariffs for Canadian exports to the U.S., primarily impacting the petroleum industry, auto manufacturers, primary and fabricated metal manufacturers, and the plastics industry.

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“The implied annual impact of 0.1 per cent to 0.2 per cent might not appear all that large, but it adds up to a substantial amount of foregone production potential—about $20 billion (in today’s dollars) of annual output over time,” RBC economists Nathan Janzen and Mathias Hartpence said.

The absence of NAFTA could also lead to lower profits for companies and “probably higher prices for consumers,” apart from diminishing Canada’s competitiveness relative to off-shore producers.