Don't Get Nervous — Trump on NAFTA

USDA undersecretary Ted Mc Kinney addresses AFBF

The Canadian dollar and the Toronto stock index fell on the news. Nine of the index's 10 main sectors closed lower.

Canadian officials say they expect contentious issues as part of any trade negotiation but are ready to work with the US and Mexico toward an updated NAFTA.

One of the sources, who works with the Canadian government, even said they were "sure" Trump will withdrawal from the pact and that they are planning for the announcement.

Canada's two-year government bonds also took a hit, dropping seven basis points to 1.73 percent.

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Talks to overhaul NAFTA between the U.S., Canada and Mexico began in August but have so far yielded few results.

Separately, in another sign of worsening relations between Canada and the US - which enjoy the second-largest trading relationship in the world - the government in Ottowa on Monday filed a 32-page complaint against its southern neighbour with the World Trade Organisation, accusing the United States of America of repeatedly breaking trade rules over the last two decades.

US Trade Representative Robert Lighthizer has called Canada's complaint "unfounded".

Any of the three countries can pull out of NAFTA if they give six months' notice, but the agreement remains in effect. They also express doubt whether the U.S. Congress would approve such a move. The concern from Canada comes as officials are set on having sixth and final series of negotiations in Montreal for five days in late January.

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