In ongoing trade discussions to avoid potential U.S. tariffs, a newly released study cautions that the collapse of the Canada-U.S.-Mexico Agreement (CUSMA) could result in significant job losses and substantial economic repercussions for both countries. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, examined the potential outcomes of the trade negotiations between the U.S. and Canada.

Three scenarios were analyzed: the maintenance of current tariffs, the breakdown of the CUSMA agreement, and a successful renegotiation leading to improved trade relations. If the CUSMA were to unravel, an estimated 214,000 American and 102,000 Canadian jobs would be at risk compared to the scenario where the agreement remains intact. 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 importance of the trading relationship between the two nations, underscoring the potential impact on employment, economic stability, and affordability for citizens on both sides. The report projected substantial GDP losses for both countries in the event of a breakdown, with inflation likely to rise and real disposable income growth stifled, especially in Canada.

The report highlighted that the worst-case scenario would heavily impact manufacturing sectors in the U.S., particularly in auto, wood product, and metal manufacturing industries. Similarly, Quebec and Ontario in Canada would face significant challenges if the CUSMA were to collapse, affecting their manufacturing hubs.

As the deadline approaches for potential new tariffs on Canadian exports, officials are working to negotiate a deal to avert these tariffs. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are actively engaged in discussions, aiming to present a trade deal to President Donald Trump before the tariff deadline.

Burke expressed optimism about the ongoing negotiations, acknowledging the need for concessions from both sides to reach a mutually beneficial agreement. Failure to secure a deal could result in detrimental impacts on various manufacturing sectors, predominantly in central Canada.

The potential consequences of failed negotiations and the imposition of new tariffs are significant, with projections indicating adverse effects on the manufacturing industry and regional economies. The report stressed the importance of reaching a successful trade agreement to safeguard jobs, economic growth, and stability in both the U.S. and Canada.