Amid ongoing trade discussions to prevent additional U.S. tariffs, a recent study warns that the collapse of the Canada-U.S.-Mexico Agreement (CUSMA) could result in significant job losses and severe economic repercussions on both sides of the border. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, examined three potential outcomes of the trade negotiations between the U.S. and Canada.
In a scenario where CUSMA is terminated, the report forecasts the loss of 214,000 American jobs and 102,000 Canadian jobs compared to the current status. Conversely, successful renegotiation of CUSMA could lead to the creation of 137,000 jobs in the U.S. and 98,000 jobs in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the importance of the trade relationship between the two countries, noting the significant impact on job security and stability. The study also projected substantial GDP losses for both nations in the event of a breakdown, with the U.S. facing a $1.04 trillion impact and Canada $271 billion by 2035.
Manufacturing sectors, particularly in industries such as auto, wood, and metal products, would bear the brunt of the fallout in the worst-case scenario in the U.S., affecting states like Iowa, Michigan, Kentucky, and Alabama. Similarly, Quebec and Ontario would be heavily impacted in Canada due to their reliance on manufacturing industries.
As the deadline approaches for potential new tariffs on Canadian goods, negotiations are ongoing to reach a trade agreement before the looming deadline. Canadian Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer have been engaged in discussions, aiming to present a trade deal to President Donald Trump for consideration.
While talks continue, concessions from both sides may be necessary to reach a mutually beneficial agreement. Failure to secure a deal could result in significant challenges for manufacturers in central Canada, particularly in sectors like cement, concrete, paper products, wood, electronics, and plastics.
The study underscores the critical importance of trade relations between the U.S. and Canada and the far-reaching implications of the ongoing negotiations on both economies and job markets.