A fresh analysis warns of significant job losses and economic repercussions if the Canada-U.S.-Mexico Agreement (CUSMA) were to collapse. The report, conducted by Oxford Economics for the Canadian American Business Council, assessed three potential outcomes of the ongoing U.S.-Canada trade talks. It outlined scenarios where current tariffs persist, CUSMA disintegrates, or CUSMA is successfully revamped to enhance the trade relationship.
Should CUSMA fail, an estimated 214,000 American and 102,000 Canadian jobs would be at risk, contrasting with maintaining the current tariff status. Conversely, successful renegotiation could lead to the addition of 137,000 U.S. jobs and 98,000 Canadian jobs.
Beth Burke, CEO of the Canadian American Business Council, emphasized the significance of the U.S.-Canada trade relationship for both countries’ prosperity, underscoring the tangible impact on employment and economic stability.
The repercussions extend beyond job losses, with the breakdown scenario projected to cost the U.S. economy $1.04 trillion and Canada $271 billion by 2035. Inflation rates would likely surge in the short and long term, impeding real disposable income growth, especially in Canada.
The report’s bleak outlook for the worst-case scenario points to severe impacts on manufacturing industries in the U.S., particularly in auto, wood product, and metal product manufacturing. Similarly, Quebec and Ontario in Canada would bear the brunt of the fallout due to their significant manufacturing sectors.
As the August 19 deadline looms for potential new tariffs on Canadian goods, trade representatives are striving to strike a deal to avert the escalation. Trade Minister Dominic LeBlanc’s ongoing meetings with U.S. Trade Representative Jamieson Greer aim to present a trade agreement to President Donald Trump before the tariff deadline.
Continued negotiations are crucial, with concessions expected from both sides to reach a mutually beneficial deal. Failure to secure an agreement could result in severe consequences for manufacturers in central Canada, as highlighted in recent reports.
The potential implementation of new tariffs would disproportionately impact sectors like cement, concrete, paper products, wood, computers, electronics, plastics, and rubber manufacturing. Provinces heavily reliant on these industries, such as Ontario, New Brunswick, and Quebec, are predicted to face the most significant challenges, while others like Saskatchewan, Alberta, and Newfoundland and Labrador may experience lesser impacts.