As discussions to prevent new U.S. tariffs progress, a recent study warns of severe job losses and significant economic ramifications if the Canada-U.S.-Mexico Agreement (CUSMA) collapses. The analysis, conducted by Oxford Economics for the Canadian American Business Council and unveiled on Monday, assessed the potential outcomes of the trade negotiations between the U.S. and Canada.
The study envisioned three scenarios: maintaining current tariffs, CUSMA termination, and successful renegotiation of CUSMA resulting in improved trade relations. If CUSMA were to dissolve, 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 the creation of 137,000 jobs in the U.S. and 98,000 jobs in Canada.
According to Beth Burke, CEO of the Canadian American Business Council, the findings underscore the critical importance of the U.S.-Canada trade relationship for both nations’ prosperity. The potential job losses and economic impacts outlined in the report emphasize the significance of maintaining a strong trading partnership between the two countries.
In a breakdown scenario, the report projected substantial GDP losses for both countries, with the U.S. facing a $1.04 trillion reduction and Canada a $271 billion decrease by 2035. Inflation rates would likely rise in the short and long term, while real disposable income growth, especially in Canada, would be constrained.
The report highlighted that in the worst-case scenario, manufacturing sectors in the U.S., such as auto, wood product, and metal manufacturing, would suffer significantly. Similarly, Quebec and Ontario in Canada would bear the brunt of the impact on manufacturing industries if CUSMA were to collapse.
As the deadline approaches for new 50% tariffs on various Canadian goods, efforts are ongoing to reach a trade agreement before the looming deadline. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are actively engaged in discussions to present a potential trade deal to U.S. President Donald Trump. Concessions from both sides may be necessary for a successful agreement to materialize.
If negotiations fail and the new tariffs are imposed, central Canadian manufacturers are expected to be hit the hardest. A recent report from Oxford Economics predicted that manufacturers of cement, concrete, paper products, wood, computers, electronics, plastics, and rubber would face the most significant impact. Provinces like Ontario, New Brunswick, and Quebec are likely to be the most affected due to their reliance on these sectors, while provinces like Saskatchewan, Alberta, and Newfoundland and Labrador may experience less impact.