A new report has cautioned that the potential breakdown of the Canada-U.S.-Mexico Agreement (CUSMA) could result in significant job losses and economic repercussions on both sides of the border. The report, conducted by Oxford Economics for the Canadian American Business Council and released on Monday, analyzed the potential outcomes of the ongoing trade negotiations between the U.S. and Canada.
The report outlined three scenarios: one where current tariffs remain unchanged, another where CUSMA collapses, and a third where CUSMA is successfully renegotiated, leading to an improved trading relationship. If CUSMA were to end, the report projected the loss of 214,000 American jobs and 102,000 Canadian jobs compared to the status quo. Conversely, successful renegotiation could create 137,000 new jobs in the U.S. and 98,000 in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the importance of the U.S.-Canada trading relationship for both countries’ prosperity, highlighting the significant impact on jobs and economic stability. The report estimated that if CUSMA were to fail, the U.S. economy could lose $1.04 trillion, while Canada could lose $271 billion by 2035, affecting inflation rates and disposable income.
In a breakdown scenario, manufacturing sectors in the U.S., particularly in auto, wood product, and metal product manufacturing, would suffer, impacting states like Iowa, Michigan, Kentucky, and Alabama. Similarly, Quebec and Ontario in Canada would face significant challenges in their manufacturing industries if CUSMA were to collapse.
As the deadline for new tariffs on Canadian exports approaches, efforts are ongoing to reach a trade deal to avert these tariffs. Canadian Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are working to present a potential deal to President Donald Trump before the deadline. Talks are progressing with concessions expected from both sides for a successful agreement.
Failure to reach a deal could result in the implementation of new tariffs, hitting manufacturers in central Canada and sectors like cement, concrete, paper products, wood, electronics, plastics, and rubber the hardest. The report by Oxford Economics indicates that Ontario, New Brunswick, and Quebec would be most affected due to their reliance on these industries, while Saskatchewan, Alberta, and Newfoundland and Labrador would be less impacted.