A recent report has cautioned about the potential consequences of the breakdown of the Canada-U.S.-Mexico Agreement (CUSMA) on job losses and economic ramifications for both countries. The analysis, conducted by Oxford Economics for the Canadian American Business Council, evaluated three scenarios in the trade negotiations between the U.S. and Canada.
If CUSMA were to collapse, the report predicts substantial job losses of 214,000 in the U.S. and 102,000 in Canada compared to the current status quo. Conversely, successful renegotiation of CUSMA could lead to job gains of 137,000 in the U.S. and 98,000 in Canada.
The CEO of the Canadian American Business Council, Beth Burke, emphasized the significance of the trading relationship between the two nations, stressing the importance of preserving it for mutual success. The report also outlines the economic impact beyond job losses, projecting a significant decline in GDP for both countries in the event of a breakdown scenario.
In a breakdown situation, the manufacturing sectors in the U.S., particularly in states like Iowa, Michigan, Kentucky, and Alabama, would be severely affected. Similarly, Quebec and Ontario in Canada would face significant challenges in their manufacturing industries if CUSMA were to fail.
As the deadline approaches for potential 50% tariffs on Canadian goods, negotiations are ongoing between officials to reach a deal before the looming deadline. Trade Minister Dominic LeBlanc is actively engaging with U.S. Trade Representative Jamieson Greer to present a possible trade agreement to President Trump. Both sides are expected to make concessions for a mutually beneficial deal.
In case the tariffs are imposed, manufacturers in central Canada, specifically in sectors like cement, concrete, paper products, wood, computers, electronics, plastics, and rubber, are likely to bear the brunt of the impact. Provinces such as Ontario, New Brunswick, and Quebec are expected to be the most affected due to their reliance on these industries.
The report underscores the critical need for continued negotiations and compromise to avert potential economic turmoil and job losses on both sides of the border.