A new study cautions that the termination of the Canada-U.S.-Mexico Agreement (CUSMA) amid ongoing trade negotiations could result in significant job losses and economic repercussions for both nations. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, assessed the potential outcomes of the current trade discussions between the U.S. and Canada.
Three scenarios were analyzed: the maintenance of existing tariffs, the breakdown of CUSMA, and a successful renegotiation improving trade relations. If CUSMA were to collapse, an estimated 214,000 American and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, successful renegotiation could lead to job gains of 137,000 in the U.S. and 98,000 in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the significance of the U.S.-Canada trading relationship in sustaining prosperity for both countries. The report also projected substantial economic impacts beyond job losses, with the breakdown of CUSMA potentially costing the U.S. $1.04 trillion and Canada $271 billion by 2035, accelerating inflation rates while impeding real disposable income growth.
The worst-case scenario outlined in the report highlighted manufacturing sectors such as automotive, wood, and metal products being severely affected, particularly in states like Iowa, Michigan, Kentucky, and Alabama in the U.S., as well as provinces like Quebec and Ontario in Canada.
As the deadline for potential new tariffs approaches, efforts are ongoing to reach a trade deal and avert further economic disruption. Canadian officials, including Trade Minister Dominic LeBlanc, are actively engaging with their U.S. counterparts to present viable solutions to President Trump before the tariff deadline.
Negotiations are expected to involve concessions from both sides, underscoring the necessity for compromise to secure a mutually beneficial agreement. Failure to reach a deal and the imposition of new tariffs could have significant repercussions on central Canadian manufacturing industries, with cement, concrete, paper, wood, computer, electronics, plastics, and rubber manufacturers likely to bear the brunt of the impact.
Provinces like Ontario, New Brunswick, and Quebec are anticipated to be most affected due to their reliance on these vulnerable sectors, while Saskatchewan, Alberta, and Newfoundland and Labrador may experience comparatively lesser impacts.