Amid ongoing trade discussions to prevent additional U.S. tariffs, a recent analysis suggests that the collapse of the Canada-U.S.-Mexico Agreement could result in significant job losses and substantial economic repercussions for both countries. The report, conducted by Oxford Economics for the Canadian American Business Council and unveiled on Monday, evaluated the potential outcomes of the trade negotiations 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 enhanced trade relations. In the event of CUSMA termination, 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 potentially create 137,000 new jobs in the U.S. and 98,000 in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the significance of the U.S.-Canada trade relationship in sustaining job security and economic stability for citizens of both nations. The potential fallout from a failed agreement includes projected GDP losses of $1.04 trillion for the U.S. and $271 billion for Canada by 2035, with inflation likely increasing and real disposable income growth stunted, particularly in Canada.
The report highlighted that in a worst-case scenario, U.S. manufacturing sectors such as auto, wood products, and metal manufacturing would suffer, impacting states like Iowa, Michigan, Kentucky, and Alabama. Similarly, Quebec and Ontario in Canada would face severe repercussions within their manufacturing industries if CUSMA disintegrates.
As the deadline approaches for new 50% tariffs on certain Canadian exports, officials are striving to reach a deal to avert the tariffs. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are engaged in discussions to present a potential trade deal to President Donald Trump before the tariff deadline.
Negotiations are ongoing, with potential concessions expected from both sides for a successful resolution. Failure to reach a deal could result in adverse effects on central Canadian manufacturers. Reports suggest that manufacturers of cement, concrete, paper products, wood, computers, electronics, plastics, and rubber would be significantly impacted by the new tariffs.
Provinces like Ontario, New Brunswick, and Quebec are predicted to be hardest hit due to their reliance on the affected manufacturing sectors, while Saskatchewan, Alberta, and Newfoundland and Labrador are projected to experience lesser impacts.
The evolving trade discussions underscore the critical importance of the U.S.-Canada trade relationship and the potential ramifications for both economies if an agreement is not reached.