Amid ongoing trade negotiations to avoid additional U.S. tariffs, a recent study cautions that the collapse of the Canada-U.S.-Mexico Agreement (CUSMA) could result in substantial job losses and significant economic repercussions on both sides of the border.
A detailed analysis conducted by Oxford Economics, an independent economic advisory firm, on behalf of the Canadian American Business Council (CABC) and unveiled on Monday, assessed the potential outcomes of the current trade discussions between the U.S. and Canada.
The study considered three scenarios: maintaining existing tariffs, CUSMA dissolution, and successful CUSMA renegotiation leading to improved trade relations.
If CUSMA were to disintegrate, an estimated 214,000 jobs in the U.S. and 102,000 jobs in Canada would be at risk compared to the status quo. Conversely, successful renegotiation could result in job gains of 137,000 in the U.S. and 98,000 in Canada.
Beth Burke, the CEO of CABC, emphasized the tangible impact on jobs, stability, and economic security for both Canadians and Americans amidst rising living costs.
She underscored the critical importance of the U.S.-Canada trade relationship for the prosperity of both nations.
The study’s projections indicated that if CUSMA were to collapse, the GDP of both countries would suffer, with the U.S. economy facing a potential loss of $1.04 trillion USD and Canada risking $271 billion CAD by 2035. Inflation rates would likely rise in the short and long term, while real disposable income growth, especially in Canada, would be hindered.
Conversely, successful negotiation forecasts in the study point to increased disposable income for citizens on both sides of the border, lower inflation rates, and significant GDP gains for both countries.
A recent report by CABC outlined the potential economic impacts of various outcomes in the CUSMA negotiations, indicating significant job risks in ongoing trade discussions. Power & Politics interviews Beth Burke, CEO of CABC, shedding light on the criticality of the ongoing trade talks.
The study’s worst-case scenario highlighted that manufacturing sectors in the U.S., particularly auto, wood product, and metal industries, would bear the brunt of a CUSMA breakdown. States like Iowa, Michigan, Kentucky, and Alabama are projected to face significant repercussions.
In Canada, Quebec and Ontario would be most affected in the event of CUSMA termination, with domestic manufacturing industries facing substantial challenges.
Trade representatives continue negotiations
As the deadline of August 19 approaches for potential 50% tariffs on various Canadian goods, efforts persist to reach a deal that would avert these tariffs.
Trade Minister Dominic LeBlanc of Canada was scheduled to meet with U.S. Trade Representative Jamieson Greer, aiming to propose a trade agreement to U.S. President Donald Trump before the looming tariff deadline.
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