As negotiations to avoid additional U.S. tariffs progress, a fresh report cautions that the collapse of the Canada-U.S.-Mexico Agreement could result in substantial job losses and significant economic repercussions on both sides of the border. The analysis, 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 report considered three scenarios: the continuation of existing tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation leading to an improved trading relationship. If CUSMA were to terminate, an estimated 214,000 American and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, successful renegotiation could generate job gains of 137,000 in the U.S. and 98,000 in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the importance of the U.S.-Canada trading relationship for the prosperity of both nations, emphasizing the tangible impact on jobs, stability, and security. The repercussions extend beyond employment figures, with the report projecting significant GDP losses for both countries in the event of a breakdown, alongside heightened inflation and reduced real disposable income, particularly in Canada.
In a worst-case scenario, the report highlighted that U.S. manufacturing sectors, including auto, wood products, and metal manufacturing, would bear the brunt of the impact. Similarly, Quebec and Ontario in Canada would face significant challenges if CUSMA were to falter, impacting their respective manufacturing industries.
As the deadline approaches for potential new tariffs on Canadian exports, efforts are underway to reach a compromise before the looming deadline. Trade Minister Dominic LeBlanc’s ongoing discussions with U.S. Trade Representative Jamieson Greer aim to present a viable trade agreement to President Donald Trump. The need for concessions from both sides to secure a deal was underscored, emphasizing the dynamic nature of negotiations.
Despite the challenges, ongoing talks are seen as a positive sign, with hopes that concessions and compromises will pave the way for a mutually beneficial agreement. The potential implications of failed negotiations underscore the urgency of finding common ground to avert significant economic disruptions on both sides of the border.