As negotiations continue to prevent additional U.S. tariffs, a recent report cautions about the potential consequences of the collapse of the Canada-U.S.-Mexico Agreement, forecasting significant job losses and economic repercussions on both sides of the border.
The study, commissioned by the Canadian American Business Council and conducted by Oxford Economics, examined three possible outcomes of the trade talks between the U.S. and Canada. These scenarios included the maintenance of current tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation leading to an improved trading relationship.
In the event of CUSMA termination, the report projected the loss of 214,000 American jobs and 102,000 Canadian jobs compared to the status quo. Conversely, a successful renegotiation could result in job gains of 137,000 in the U.S. and 98,000 in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the significance of the trade relationship between the two countries, stressing the potential impact on jobs, stability, and economic security.
The report highlighted the broader implications beyond employment, estimating that a breakdown of CUSMA could cost the U.S. economy $1.04 trillion and Canada $271 billion by 2035. Additionally, it suggested that inflation rates could rise, while real disposable income growth might be hindered, particularly in Canada.
The report’s worst-case scenario outlined adverse effects on manufacturing industries in the U.S., with auto, wood product, and metal product manufacturing sectors facing substantial losses. Similarly, Quebec and Ontario in Canada were identified as vulnerable manufacturing hubs if CUSMA were to fail.
As the deadline approaches for potential new tariffs on Canadian exports, officials are actively engaged in negotiations to reach a deal that could avert these tariffs. Trade representatives are striving to present a viable agreement to U.S. President Donald Trump before the looming deadline, with discussions ongoing to address concerns on both sides.
While challenges persist, ongoing talks indicate a willingness to make concessions to secure a mutually beneficial agreement. Failure to reach a deal could result in significant impacts on various manufacturing sectors, particularly in central Canada.
