In ongoing trade discussions to avoid additional U.S. tariffs, a recent report cautions about the potential ramifications if the Canada-U.S.-Mexico Agreement (CUSMA) were to collapse. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, projected three possible outcomes of the trade talks between the U.S. and Canada.
If CUSMA were to dissolve, the report estimates that around 214,000 jobs in the U.S. and 102,000 jobs in Canada would be lost compared to the current tariff status. 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 U.S.-Canada trading relationship, stressing the impact on jobs, economic stability, and affordability for citizens of both countries.
The report also delves into the broader economic effects, forecasting that a breakdown in the agreement could cost the U.S. economy $1.04 trillion and Canada $271 billion by 2035. Inflation rates would likely rise, and real disposable income growth would be hindered, particularly in Canada.
In the worst-case scenario outlined in the report, manufacturing sectors, including auto, wood product, and metal manufacturing, would be severely impacted in the U.S., affecting states like Iowa, Michigan, Kentucky, and Alabama. Similarly, manufacturing hubs in Quebec and Ontario would bear the brunt in Canada if CUSMA were to falter.
As the deadline nears for potential new tariffs on various Canadian goods, officials are working to reach a deal before the impending tariffs take effect. Trade Minister Dominic LeBlanc’s ongoing discussions with U.S. Trade Representative Jamieson Greer aim to present a trade proposal to President Donald Trump before the deadline.
Burke expressed optimism about the ongoing talks but suggested that concessions from both sides might be necessary for a successful agreement. The looming tariffs could have a significant impact on various Canadian manufacturing sectors, with central provinces like Ontario, New Brunswick, and Quebec expected to be most affected.
A recent Oxford Economics report highlighted that cement, concrete, paper products, wood, computers, electronics, plastics, and rubber manufacturers would face the highest impact from the tariffs. Provinces like Ontario, New Brunswick, and Quebec are likely to be hit hardest due to their reliance on these sectors, while provinces like Saskatchewan, Alberta, and Newfoundland and Labrador could see less impact.
The reports underscore the urgency and complexity of the trade negotiations between the U.S. and Canada, with substantial economic consequences at stake for both countries.
