In ongoing trade discussions to prevent new U.S. tariffs, a recent study warns of severe job losses and significant economic repercussions on both sides of the Canada-U.S.-Mexico Agreement if the deal collapses. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, assessed three potential outcomes of the trade talks between the U.S. and Canada.
The study outlined scenarios where current tariffs persist, where the CUSMA agreement disintegrates, and where successful renegotiation leads to improved trade relations. If CUSMA were to dissolve, approximately 214,000 American and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, a successful renegotiation could result in job additions of 137,000 in the U.S. and 98,000 in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the tangible impact on jobs, stability, and affordability for citizens of both countries. She underscored the significance of the U.S.-Canada trading relationship for the prosperity of both nations.
Additionally, the report indicated that a breakdown in the agreement would cost the U.S. economy $1.04 trillion and Canada $271 billion by 2035, affecting inflation rates and disposable income growth. Conversely, successful negotiations could lead to increased disposable income, lower inflation, and substantial GDP gains for both countries.
The worst-case scenario in the report highlighted potential challenges for manufacturing industries in the U.S., particularly in auto, wood product, and metal manufacturing sectors. Similarly, Quebec and Ontario in Canada would face significant setbacks if CUSMA were to collapse, impacting their manufacturing sectors.
As the deadline for new tariffs approaches, officials are actively engaging in negotiations to avert the tariff imposition. Canadian Trade Minister Dominic LeBlanc’s ongoing discussions with U.S. Trade Representative Jamieson Greer aim to present a possible trade deal to President Trump before the impending deadline.
Burke expressed optimism about the ongoing talks, emphasizing the need for concessions from both sides to reach a mutually beneficial agreement. She highlighted the essence of compromise in successful negotiations.
If the proposed deal fails, new tariffs are expected to disproportionately impact manufacturers in central Canada, with a focus on cement, concrete, paper products, and other key industries. Provinces like Ontario, New Brunswick, and Quebec are likely to bear the brunt of these tariffs due to their heavy reliance on affected manufacturing sectors.
