Trade discussions are ongoing to prevent the imposition of additional U.S. tariffs, with a recent report cautioning that the breakdown of the Canada-U.S.-Mexico Agreement could result in significant job losses and economic consequences on both sides of the border.
A newly released report by Oxford Economics for the Canadian American Business Council evaluated the potential outcomes of the trade talks between the U.S. and Canada. The report outlined scenarios where current tariffs remain unchanged, where the CUSMA agreement collapses, and where CUSMA is successfully renegotiated, leading to improved trade relations.
If CUSMA were to dissolve, an estimated 214,000 American and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, successful renegotiation could result in job gains of 137,000 in the U.S. and 98,000 in Canada.
CEO of the Canadian American Business Council, Beth Burke, emphasized the significance of the U.S.-Canada trading relationship in supporting the prosperity of both nations. She highlighted the potential loss of jobs and economic stability if the agreement fails.
According to the report, the breakdown of CUSMA could lead to significant GDP impacts, costing the U.S. economy $1.04 trillion and Canada $271 billion by 2035. Inflation rates are projected to rise, affecting disposable income, particularly in Canada.
Manufacturing sectors in the U.S., including auto, wood products, and metal manufacturing, would face challenges in the worst-case scenario outlined in the report. Similarly, Quebec and Ontario in Canada would bear the brunt of job losses if CUSMA collapses.
Efforts to Reach a Trade Agreement
As the deadline approaches for potential new tariffs on Canadian products, negotiations are ongoing to avert the imposition of 50% tariffs on various goods. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are actively working towards presenting a trade deal to President Donald Trump before the tariff deadline.
Stressing the importance of ongoing talks, Burke mentioned that concessions from both sides might be necessary for a successful deal. She emphasized the need for flexibility in negotiations to reach a mutually beneficial agreement.
In the event that negotiations fail and new tariffs are implemented, manufacturing sectors in central Canada, particularly cement, paper products, wood, computers, electronics, plastics, and rubber, are expected to face the most significant impact.
Ontario, New Brunswick, and Quebec are likely to be the most affected provinces due to their reliance on these industries, while Saskatchewan, Alberta, and Newfoundland and Labrador are projected to be less impacted.
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