Amid ongoing trade negotiations to prevent additional U.S. tariffs, a recent study has cautioned about the severe consequences of the potential collapse of the Canada-U.S.-Mexico Agreement. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, an independent economic advisory firm, evaluated the potential outcomes of the trade discussions between the U.S. and Canada.
The study considered three scenarios: the continuation of existing tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation leading to improved trade relations. If CUSMA were to terminate, the report projected the loss of 214,000 American and 102,000 Canadian jobs compared to the status quo. Conversely, 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 trade partnership between the two countries, stressing the impact on job security and economic stability for citizens of both nations.
According to the report’s estimates, the breakdown of CUSMA would lead to substantial GDP losses, totaling $1.04 trillion for the U.S. and $271 billion for Canada by 2035. Inflation rates would rise, and real disposable income growth would be hampered, especially in Canada. Conversely, successful negotiations would boost disposable income, curb inflation, and generate significant GDP gains for both countries.
A recent report by the Canadian American Business Council outlined the economic ramifications of potential outcomes of CUSMA negotiations, indicating the substantial job losses at stake in the ongoing trade discussions. Beth Burke discusses the significance of the ongoing talks in Washington with Power & Politics.
Under the worst-case scenario outlined in the report, manufacturing sectors in the U.S., particularly in auto, wood product, and metal product manufacturing, would suffer. Similarly, Quebec and Ontario in Canada, known manufacturing hubs, would face significant setbacks if CUSMA were to collapse.
Negotiations for a Trade Deal Continue
The approaching deadline of August 19 for new 50% tariffs on various Canadian goods, constituting approximately five percent of Canada’s exports to the U.S., has spurred ongoing efforts to reach an agreement before the imposition of tariffs.
Trade Minister Dominic LeBlanc of Canada was scheduled to meet with U.S. Trade Representative Jamieson Greer for the third time in as many weeks. Sources suggest that both parties aim to propose a trade deal to President Donald Trump as early as Monday, allowing time for a decision before the tariff deadline.
Burke welcomed the progress of the negotiations, indicating that compromises may be necessary from both sides to reach a mutually beneficial agreement.