Feigenbaum Law

Navigating NAFTA Uncertainty – Legal and Financial Advice for Cross-Border Businesses

Corporate Tax Planning
February 17, 2017

As Donald Trump enters his second month in the White House, the administration’s position regarding the North American Free Trade Agreement (NAFTA), and Canadian-U.S. trade relations generally, remains unclear.

Ongoing uncertainty about American intentions for NAFTA and cross-border business

Despite bombastic claims about repealing NAFTA during his campaign, Trump has not provided any reliable guidance as to what North Americans can expect on the trade agreement going forward. Threats of imposing a unilateral 20% “border adjustment tax” to any goods manufactured by American companies outside the United States have not been followed by any actions to indicate these threats have substance. Meanwhile Canadian and American businesses with cross-border activities anxiously await possible changes that could impact their bottom line.

Canadian Foreign Affairs Minister Chrystia Freeland has made it clear to the Americans during a visit last week, that any such attempt to impose tariffs would be responded to in kind. The impact of such a tax on Canadian exporters could be severe.

Justin Trudeau’s visit to the United States

During Prime Minister Justin Trudeau’s visit to Washington, D.C. earlier this week, he discussed the trade issue with Trump. Despite this, we appear no closer to achieving clarity with respect to Trump’s intentions with regard to Canadian-American trade. His statements that the United States merely wishes to “tweak” the arrangement under NAFTA is less than reassuring, given the fact that the agreement is multi-lateral, and the administration seems bent on discarding significant parts of that relationship.

Unanswered questions remain on the status of Canadian firms’ U.S. investments under any proposed “Buy America” policies, and no technical details about the NAFTA renegotiation exist as of yet.

Reliable cross-border tax and business advice during uncertainty

Until more information becomes available, cross-border businesses should keep in close contact with their legal and financial representatives about how potential changes may impact their interests. At Feigenbaum Tax Law, we can provide personal, tailored services that address your unique concerns. We assist high net worth and professional clients from Canada, the United States, and around the world.

If you have questions about cross-border business planningĀ or tax compliance, we can assist. Contact us online, or toll free at (877) 275-4792.

Tagged: NAFTA