A recent analysis warns that if the Canada-U.S.-Mexico Agreement collapses, it could result in significant job losses and economic repercussions for both countries. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, explored the potential outcomes of the current trade negotiations between the U.S. and Canada.
Three scenarios were examined: the maintenance of existing tariffs, the breakdown of the CUSMA agreement, and a successful renegotiation leading to improved trade relations. In the event of CUSMA termination, an estimated 214,000 jobs in the U.S. and 102,000 jobs in Canada would be lost compared to the status quo. Conversely, successful renegotiation could result in the creation of 137,000 jobs in the U.S. and 98,000 jobs in Canada.
The CEO of the Canadian American Business Council, Beth Burke, emphasized the significance of the trading relationship between the two countries, stressing the impact on job security and economic stability. The report projected substantial GDP losses amounting to $1.04 trillion for the U.S. and $271 billion for Canada by 2035 if CUSMA were to fail. Inflation rates would likely rise in both nations, while real disposable income growth, particularly in Canada, would be hindered.
The report highlighted potential repercussions on manufacturing industries in the worst-case scenario, with sectors like auto, wood product, and metal manufacturing facing significant losses. States like Iowa, Michigan, Kentucky, and Alabama could be adversely affected in the U.S., while Quebec and Ontario would bear the brunt in Canada.
As the deadline for new tariffs approaches, officials are working to reach a deal to avert further economic strain. Canada’s Trade Minister met with the U.S. Trade Representative to present a potential trade agreement, aiming to secure a decision before the tariff deadline.
Negotiations continue, with expectations of compromises from both sides to reach a mutually beneficial agreement. Failure to reach a deal could result in increased tariffs impacting various industries, with central Canadian manufacturers expected to be most affected. Ontario, New Brunswick, and Quebec are projected to face the highest impact due to their reliance on vulnerable sectors, while other provinces like Saskatchewan, Alberta, and Newfoundland and Labrador may be less affected.
A recent report by Oxford Economics highlighted the potential impact on manufacturers, particularly cement, concrete, paper products, wood, computers, electronics, plastics, and rubber industries. The hardest-hit provinces are anticipated to be Ontario, New Brunswick, and Quebec, given their heavy reliance on these sectors. Conversely, Saskatchewan, Alberta, and Newfoundland and Labrador are expected to experience lesser impacts.