A new economic report warns that the collapse of the Canada-US-Mexico Agreement could result in significant job losses and economic disruption on both sides of the border.
Trade Agreement Breakdown Could Impact Jobs
A report prepared for the Canadian American Business Council by Oxford Economics examined three possible outcomes for ongoing Canada-US trade negotiations: maintaining current tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation that improves trade relations.
According to the report, a CUSMA breakdown could result in the loss of approximately 214,000 jobs in the United States and 102,000 jobs in Canada compared with the current situation.
By contrast, a successful renegotiation could create new employment opportunities, with an estimated 137,000 additional jobs in the US and 98,000 in Canada.
Economic Impact of a CUSMA Collapse
The report estimates that a breakdown of the trade agreement could significantly reduce economic growth. By 2035, the US economy could lose approximately $1.04 trillion, while Canada could face losses of about $271 billion.
The analysis also suggests that inflation could increase in both countries, while real disposable income growth could slow, particularly for Canadian households.
A successful trade agreement would produce the opposite effect, with stronger GDP growth, higher disposable income and slower inflation across both economies.
Manufacturing Sector Faces Biggest Risks
Manufacturing industries would be among the hardest hit if CUSMA ended. In the United States, sectors including automotive, wood products and metal manufacturing would face significant challenges, affecting states such as Michigan, Iowa, Kentucky and Alabama.
In Canada, manufacturing centres in Ontario and Quebec would experience the largest impact due to their dependence on cross-border trade and industrial exports.
Canada and US Continue Tariff Negotiations
The report comes as officials continue negotiations ahead of a potential August 19 deadline for new 50% tariffs on certain Canadian exports to the United States, including products such as honey, plywood and other goods.
Canadian Trade Minister Dominic LeBlanc and US Trade Representative Jamieson Greer continue discussions in an effort to reach an agreement before the deadline. Officials have indicated that both countries may need to make concessions as part of the negotiation process.
Recent proposals have focused on strategic sectors, with manufacturers expected to face the greatest pressure if new tariffs are introduced.
