In ongoing negotiations to prevent additional U.S. tariffs, a recent report has raised alarms about the potential fallout if the Canada-U.S.-Mexico Agreement (CUSMA) were to collapse. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, assessed the impact of various outcomes of the trade talks between the U.S. and Canada.
Three scenarios were considered: the continuation of existing tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation leading to improved trade relations. The report indicated that if CUSMA were to fail, approximately 214,000 American jobs and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, successful renegotiation could result in 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 trading relationship for both nations’ prosperity. The report also projected significant economic implications, estimating that the breakdown of CUSMA could cost the U.S. economy $1.04 trillion USD and Canada $271 billion CAD by 2035. This scenario would likely lead to accelerated inflation and hindered growth in real disposable income.
In the worst-case scenario outlined in the report, manufacturing sectors in the U.S., particularly in states like Iowa, Michigan, Kentucky, and Alabama, would bear the brunt of the impact. Similarly, Quebec and Ontario in Canada would face significant challenges if CUSMA were to collapse, with manufacturing industries being the most affected.
As the deadline approaches for potential new tariffs on Canadian exports, efforts are ongoing to reach a deal before the looming deadline. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are engaged in discussions, aiming to present a trade deal to President Trump for consideration. Both sides may need to make concessions for an agreement to be reached.
Should the negotiations fail to avert new tariffs, the manufacturing sectors of central Canada are expected to experience the most substantial impact. A separate report by Oxford Economics highlighted that cement, concrete, paper products, wood, computers, electronics, plastics, and rubber manufacturers would face significant challenges if tariffs were imposed.
Ontario, New Brunswick, and Quebec are projected to be the most affected provinces due to their reliance on these industries, while Saskatchewan, Alberta, and Newfoundland and Labrador are anticipated to be less impacted. The evolving situation underscores the importance of reaching a mutually beneficial agreement to safeguard jobs and economic stability on both sides of the border.