A recent report has underlined the potential consequences of the breakdown of the Canada-U.S.-Mexico Agreement (CUSMA), warning of significant job losses and economic impacts on both sides of the border. The study, conducted by Oxford Economics for the Canadian American Business Council, analyzed three possible outcomes of the ongoing trade negotiations between the U.S. and Canada.
In a scenario where CUSMA is terminated, the report forecasted the loss of approximately 214,000 American jobs and 102,000 Canadian jobs compared to the current situation with existing tariffs. Conversely, if CUSMA is successfully renegotiated, both countries could see job gains, with the U.S. adding 137,000 jobs and Canada adding 98,000 jobs.
According to Beth Burke, CEO of the Canadian American Business Council, these findings underscore the vital importance of the trading relationship between the two countries in ensuring economic stability and job security for their citizens.
The repercussions of a breakdown in the agreement extend beyond employment figures. The report projects that the GDP of both nations would be significantly affected, estimating potential losses of $1.04 trillion USD for the U.S. and $271 billion CAD for Canada by 2035. Inflation rates are likely to rise in the short and long term, while real disposable income growth could be hampered, particularly in Canada.
The report highlights that the worst-case scenario would particularly impact manufacturing industries, including auto, wood product, and metal product manufacturing in the U.S., affecting states like Iowa, Michigan, Kentucky, and Alabama. Similarly, Quebec and Ontario in Canada would bear the brunt of the impact on manufacturing industries in case of a CUSMA breakdown.
As the deadline approaches for new tariffs on Canadian products, efforts are ongoing to reach a trade deal that would avert the imposition of these tariffs. Trade officials are engaged in negotiations, with Trade Minister Dominic LeBlanc meeting with U.S. Trade Representative Jamieson Greer to present a possible deal to President Donald Trump before the tariff deadline.
Burke emphasized the importance of continued dialogue and potential concessions from both sides to reach a mutually beneficial agreement. Failure to secure a deal could result in severe impacts on manufacturers in central Canada, as predicted by recent reports from Oxford Economics.
In conclusion, the ongoing trade talks and the fate of CUSMA remain critical for the economic well-being of both the U.S. and Canada, with job losses, GDP effects, and industry disruptions at stake.