Trade negotiations to avoid new U.S. tariffs are ongoing, with a recent report cautioning that the collapse of the Canada-U.S.-Mexico Agreement could result in significant job losses and economic repercussions for both countries. The analysis, conducted by Oxford Economics for the Canadian American Business Council and released on Monday, evaluated the potential outcomes of the trade talks between the U.S. and Canada.
The study examined three scenarios: maintaining current tariffs, CUSMA termination, and successful renegotiation benefiting job creation. If CUSMA were to end, approximately 214,000 American and 102,000 Canadian jobs would be at risk compared to the status quo. Conversely, successful renegotiation could lead to the addition of 137,000 jobs in the U.S. and 98,000 jobs in Canada.
According to Beth Burke, CEO of the Canadian American Business Council, the report underscores the vital role of the U.S.-Canada trading relationship in the prosperity of both nations. The breakdown of CUSMA would impact both countries’ GDP significantly, projecting a loss of $1.04 trillion for the U.S. and $271 billion for Canada by 2035. Inflation rates would surge in the short and long term, with real disposable income growth stunted, particularly in Canada.
The report’s worst-case scenario highlights potential job losses in manufacturing sectors, affecting auto, wood, and metal production industries in states like Iowa, Michigan, Kentucky, and Alabama in the U.S., as well as Quebec and Ontario in Canada.
With the looming threat of new 50% tariffs on various Canadian exports by August 19, negotiations persist to avert these tariffs before the deadline. Trade Minister Dominic LeBlanc has been engaging in discussions with U.S. Trade Representative Jamieson Greer in an effort to present a potential trade deal to President Trump. Both parties anticipate concessions to secure an agreement.
Failure to reach a deal could lead to significant impacts on various manufacturing sectors, as highlighted by a recent Oxford Economics report. Cement, concrete, paper products, and electronics manufacturers would face the brunt of the tariffs, affecting provinces like Ontario, New Brunswick, and Quebec the most. Conversely, Saskatchewan, Alberta, and Newfoundland and Labrador are expected to be less affected due to their industry diversification.