As negotiations to prevent additional U.S. tariffs continue, a fresh report cautions that the collapse of the Canada-U.S.-Mexico Agreement (CUSMA) could result in significant job losses and severe economic consequences for both nations. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, explored the potential outcomes of the ongoing trade discussions between the U.S. and Canada.
The analysis considered three scenarios: the continuation of existing tariffs, the breakdown of the CUSMA agreement, and a successful renegotiation leading to improved trade relations. If CUSMA were to disintegrate, an estimated 214,000 American and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, a successful renegotiation could result in 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 critical importance of the trading relationship between the two countries for their prosperity. The report projected that the termination of CUSMA would cost the U.S. economy $1.04 trillion and Canada $271 billion by 2035, affecting GDP, inflation rates, and real disposable income in both nations.
In a worst-case scenario, manufacturing sectors in the U.S., particularly in auto, wood product, and metal manufacturing, would suffer the most. Similarly, Quebec and Ontario in Canada would bear the brunt of the breakdown, impacting their manufacturing industries significantly.
With an impending deadline for new tariffs on Canadian exports, Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are engaged in discussions to avert the tariffs. Negotiations aim to present a potential trade deal to President Donald Trump before the deadline, requiring concessions from both sides for a successful agreement.
The looming threat of 50% tariffs on various Canadian products has prompted a rush among Canadian businesses to mitigate potential losses. The tariffs were initially proposed due to disputes over dairy product regulations, auto tariffs, and alcohol bans. While negotiations encompass all strategic sectors, failure to reach a deal could disproportionately affect manufacturers in central Canada.
A recent report by Oxford Economics highlighted that cement, concrete, paper products, wood, computers, electronics, plastics, and rubber manufacturers would face substantial impacts from the tariffs. Provinces like Ontario, New Brunswick, and Quebec are expected to be hardest hit due to their reliance on these sectors, while others like Saskatchewan, Alberta, and Newfoundland and Labrador may be less affected.