Canadian banks and other forecasters generally agree there will be a significant but manageable economic impact on Canada if the United States goes through with its threat to terminate NAFTA renegotiations.There is also consensus that there's little prospect for a negotiated agreement by the March 2018 deadline set by the White House and even predictions it could take until 2019 to conclude a final deal because of U.S. “poison pill” demands. There are also concerns Trump will announce an end to NAFTA in March in hopes of pressuring Canada and Mexico into accepting the damaging provisions in the American proposals.The Bank of Montreal says the end of NAFTA is a bad-but-not-worst-case scenario that businesses, markets and policymakers would adjust to fairly quickly. Economic growth “would be between 0.7 per cent and 1.0 per cent lower than would otherwise be expected over a five-year period. Additionally, consumer prices in Canada would be expected to rise roughly 0.8 percentage points, due to a weaker exchange rate and modestly higher tariffs.”The Royal Bank predicted U.S. withdrawal “would have a significant longer-run negative impact on the Canadian economy, reducing Canadian GDP by around one per cent over the next five to 10 years.” It would amount to about a $20 billion loss annually.”While the Bank of Nova Scotia didn't provide a cost estimate for a NAFTA cancellation, it said the latest U.S. demands “make prospects for a NAFTA agreement even more remote by the end of March.” The U.S. position makes “a trilateral consensus on renegotiating and modernizing NAFTA more difficult to achieve.”Trade guru Peter Clark said he expects to the U.S. will serve six-months notice on Canada and Mexico in March that it is withdrawing from NAFTA in the belief that will make the two countries more receptive to its demands.In response, Canada and Mexico “should show no weakness” and continue on with the existing negotiations which have achieved progress on various modernization issues. “That way he (Trump) takes the blame.”Ottawa should not consider cutting a deal with Washington that excludes Mexico because that will cause major damage to Canada among developing countries, Clark said. Bennett Jones, an Ottawa based international law firm, said a cancelation of NAFTA “would have a long-run negative impact on the Canadian economy and chip a percentage point off GDP as tariffs rise. And a bad new deal would raise rules of origin thresholds for local content to a level that diminishes Canadian producers' global competitiveness; impose IP rules that stymie rather than support innovation; and possibly remove the impartial trade arbitration afforded by NAFTA's Chapter 19.” The value of the loonie would likely drop, which could boost foreign demand for Canadian goods “and partially offset the direct negative impact of NAFTA abrogation.”The C.D. Howe Institute predicted the end of NAFTA would trim just over half a percentage point from Canada's economy, shave 0.55 per cent off Canada's GDP, push 25,000-50,000 Canadians from the workforce, and reduce exports by 2.8 per cent. The report said the damage “is the equivalent of a noticeable economic downturn.” However it's less than the 2.5 per cent GDP loss expected at the start of its study.In the event of NAFTA's demise, it's expected countries would revert to WTO tariffs which on average would be in the four per cent range. BMO predicted “that consumers would be the biggest net losers in all three partner countries, and not any one industry or sector.”U.S. demands for changes to the rules of origin for automobiles and a push for a five-year sunset clause in the deal are the most problematic issues for Canada, BMO said. Canada will likely reject U.S. demands for the NAFTA dispute resolution mechanism to be scrapped or weakened. The bank said other "sticking points' in the renegotiations could be U.S. demands for a sunset clause and the termination of supply management in Canada's agricultural sector.“Scrapping NAFTA would also hit business and consumer confidence, further weighing on growth and investment and potentially fuelling a cycle of falling interest rates and a declining Canada dollar.”Bennett Jones “assumes that negotiations to renew NAFTA drag on to mid-2019 and produce “some sort of arrangement between the parties on NAFTA would emerge, which would enable a continuation of significant volumes of mutually advantageous North American trade.”The protracted negotiations will create a climate of uncertainty that “will moderate business fixed investment somewhat, especially in Canada and Mexico, and consequently result in slightly slower real GDP growth than would be the case if NAFTA was not subject to renegotiation.” At least Canada has trade agreement alternatives under discussions that mitigate but not replace NAFTA in terms of volume of economic activity, it said.The C.D. Howe report said, “If the original 1987 Canada-U.S. Free Trade Agreement were to survive the end of NAFTA, an outcome that seems far from guaranteed, the impact would be fairly negligible. Preserving the Canada-Mexico partnership in NAFTA would have only a very slight impact on the damage if the U.S. leaves.”Ditching NAFTA does not resolve U.S. concerns about bilateral trade deficits, the Howe report said. “The United States suffers about as large a drop in its bilateral exports to NAFTA partners as it reduces imports from them.” It said, “The Canadian economy could remain essentially unharmed if NAFTA is terminated but the Canada-U.S. Free Trade Agreement is preserved, adding that Canada could even make marginal gains in trade, real GDP and economic welfare if liberalized trade relations are retained with Mexico.”Whatever happens with NAFTA, Canada is working to diversify its trade interests through free trade deals with India, China, the Comprehensive and Progressive Trans-Pacific Partnership and South America's Mercosur bloc, while trying to benefit from the new Canada-European Union Comprehensive Economic & Trade Agreement, BMO said. “All of these factors would work to mitigate the economic damage.”NAFTA has been a net positive for the economies of Canada, the United States and Mexico, it said, reflecting the view of the U.S. Chamber of Commerce. “It is deeply unfortunate that we are even considering this possibility of NAFTA's end.”Alex Binkley is a freelance journalist and writes for domestic and international publications about agriculture, food and transportation issues. He's also the author of two science fiction novels with more in the works.