A recent report has highlighted the potential consequences of the Canada-U.S.-Mexico Agreement (CUSMA) breaking down, warning of significant job losses and economic impacts on both sides of the border. The report, conducted by Oxford Economics for the Canadian American Business Council, examined three possible outcomes of the ongoing trade negotiations between the U.S. and Canada.
In the scenario where CUSMA ends, the report projects a loss of 214,000 jobs in the U.S. and 102,000 jobs in Canada compared to the status quo. Conversely, if CUSMA is successfully renegotiated, both countries could see job gains, with the U.S. potentially adding 137,000 jobs and Canada adding 98,000.
Beth Burke, CEO of the Canadian American Business Council, emphasized the importance of the trading relationship between the two countries, stating that job security and stability are at stake, especially during a time of economic uncertainty.
The report also estimates that the breakdown of CUSMA would have a significant impact on the GDP of both nations, costing the U.S. economy $1.04 trillion and Canada $271 billion by 2035. Inflation rates would likely increase in both countries, and real disposable income growth would be hindered, particularly in Canada.
Manufacturing industries in the U.S., such as auto, wood product, and metal manufacturing, would be severely affected in the worst-case scenario outlined in the report. Similarly, manufacturing hubs in Quebec and Ontario in Canada would face significant challenges if CUSMA were to collapse.
As the deadline approaches for potential new tariffs on Canadian products, officials are working towards a deal to avert further economic strain. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are engaged in ongoing discussions, with the aim of presenting a possible trade deal to President Donald Trump before the tariff deadline.
Negotiations are critical, with concessions expected from both sides to reach a mutually beneficial agreement. Failure to secure a deal could result in detrimental consequences for manufacturers in central Canada, according to recent analyses.
The looming economic impacts underscore the importance of the ongoing trade talks between the U.S. and Canada and the need for diplomatic resolution to safeguard jobs and economic stability on both sides of the border.
