A recent report has brought attention to the potential consequences of the Canada-U.S.-Mexico Agreement (CUSMA) breakdown, warning of significant job losses and economic repercussions on both sides of the border. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, examined three possible outcomes of the ongoing trade discussions between the U.S. and Canada.
In the scenario where CUSMA dissolves, approximately 214,000 American jobs and 102,000 Canadian jobs could be lost compared to the current status quo. Conversely, if successful renegotiation of CUSMA occurs, the U.S. and Canada could see job gains of 137,000 and 98,000, respectively.
Beth Burke, CEO of the Canadian American Business Council, emphasized the criticality of the trade relationship between the two countries for their prosperity. The economic impacts extend beyond employment figures, with the report estimating significant GDP losses in the event of a breakdown, affecting both nations up to 2035.
The report highlights potential challenges in the manufacturing sectors in the worst-case scenario, particularly in auto, wood product, and metal product industries in the U.S., impacting states like Iowa, Michigan, Kentucky, and Alabama. Similarly, Quebec and Ontario in Canada are projected to face significant repercussions in their manufacturing hubs if CUSMA collapses.
With an impending deadline for new tariffs on Canadian products, ongoing negotiations between trade representatives aim to prevent further economic strains. Trade Minister Dominic LeBlanc’s discussions with U.S. Trade Representative Jamieson Greer signal efforts to reach a trade deal before the tariff deadline.
As negotiations continue, concessions may be necessary from both sides to secure an agreement. Failure to reach a deal could result in increased tariffs affecting manufacturers, particularly in central Canada. A recent report by Oxford Economics outlines potential impacts on various industries and regions, emphasizing the importance of finding a mutually beneficial resolution to avoid detrimental economic consequences.