As negotiations to avoid new U.S. tariffs progress, a recent study warns about the potential consequences of the breakdown of the Canada-U.S.-Mexico Agreement. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, assessed the impact of various outcomes of the ongoing trade discussions between the U.S. and Canada.
The analysis considered three scenarios: the maintenance of current tariffs, the collapse of the CUSMA agreement, and a successful renegotiation leading to improved trade relations. If CUSMA were to dissolve, 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 significance of the economic relationship between the two countries, stressing the importance of preserving it for mutual prosperity. The potential job losses in both nations were highlighted in the report, projecting significant negative impacts on GDP if the agreement were to fail.
In the worst-case scenario outlined in the report, manufacturing sectors in the U.S., particularly in industries such as auto, wood products, and metal manufacturing, would be severely affected. Similarly, Quebec and Ontario in Canada, known for their manufacturing hubs, would face substantial challenges if CUSMA were to collapse.
With the looming deadline for new tariffs on Canadian exports approaching, efforts are ongoing to reach a consensus before the implementation date. Trade representatives, including Canadian Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer, are engaging in discussions to present a potential trade deal to President Donald Trump for consideration.
Burke expressed optimism about the ongoing negotiations and acknowledged that concessions might be necessary from both sides to reach a mutually beneficial agreement. The report also highlighted potential repercussions on specific industries and provinces in Canada if new tariffs were imposed, emphasizing the importance of reaching a resolution to avoid detrimental economic consequences.