Amid ongoing trade discussions to prevent new U.S. tariffs, a recent analysis alerts of severe consequences if the Canada-U.S.-Mexico Agreement collapses. The study, commissioned by the Canadian American Business Council and conducted by Oxford Economics, evaluates the potential outcomes of the trade negotiations between the U.S. and Canada.
The report examines three scenarios: the continuation of existing tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation 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, a successful renegotiation could result in the creation 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 findings underscore the vital importance of the U.S.-Canada trading relationship for the prosperity of both nations. The potential loss of jobs and economic downturn in a breakdown scenario could cost the U.S. $1.04 trillion and Canada $271 billion by 2035, impacting inflation rates and disposable income growth.
The worst-case scenario would significantly affect manufacturing sectors in the U.S., particularly in auto, wood, and metal product manufacturing, impacting states like Iowa, Michigan, Kentucky, and Alabama. In Canada, Quebec and Ontario would be most affected by a breakdown of CUSMA, with the manufacturing industry facing substantial challenges.
As the deadline approaches for new tariffs on Canadian goods, officials are striving to reach a deal before the looming Aug. 19 deadline. Trade Minister Dominic LeBlanc is in discussions with U.S. Trade Representative Jamieson Greer to present a potential trade agreement to President Donald Trump. Both sides are expected to compromise for a mutually beneficial deal.
The ongoing negotiations aim to address various sectors crucial to both countries, with hopes of averting the imposition of new tariffs. Failure to reach an agreement could impact manufacturers in central Canada the hardest, particularly industries such as cement, paper products, wood, electronics, and plastics.
The report emphasizes the necessity for concessions from both sides to secure a favorable trade deal. Talks are vital in determining the future of the U.S.-Canada trade relationship and the economic well-being of both nations.