A recent report warns of severe job losses and economic repercussions if the Canada-U.S.-Mexico Agreement breaks down amid ongoing trade talks to avoid new U.S. tariffs. The analysis by Oxford Economics for the Canadian American Business Council explored three potential outcomes: maintaining current tariffs, CUSMA collapsing, or successful renegotiation leading to improved trade ties.
Should CUSMA end, an estimated 214,000 American and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, successful renegotiation could create 137,000 new jobs in the U.S. and 98,000 in Canada. The CEO of the Canadian American Business Council emphasized the critical nature of the U.S.-Canada trade relationship for both nations’ prosperity.
Beyond job impacts, the breakdown scenario could cost the U.S. economy $1.04 trillion and Canada $271 billion by 2035, affecting GDP, inflation rates, and disposable income. In contrast, successful negotiation forecasts increased disposable income, lower inflation, and substantial GDP gains for both countries.
The report highlights potential manufacturing sector vulnerabilities in Iowa, Michigan, Kentucky, Alabama, Quebec, and Ontario if CUSMA falters. As the deadline approaches for new tariffs on Canadian goods, officials are striving to reach a deal to avert the tariffs. Negotiators are aiming to present a potential trade agreement to President Trump ahead of the deadline.
Continued talks are essential, with potential concessions expected from both sides to secure a deal. Failure to reach an agreement could result in significant new tariffs impacting central Canadian manufacturers and certain provinces more severely. A separate report from Oxford Economics indicates that cement, concrete, paper products, wood, computers, electronics, plastics, and rubber sectors would face the most substantial impact from the tariffs. Ontario, New Brunswick, and Quebec are projected to bear the brunt of the impact due to their reliance on these industries, while other provinces may fare better.