A new study has warned that if the Canada-U.S.-Mexico Agreement collapses, it could result in significant job losses and economic repercussions on both sides of the border. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, assessed the potential outcomes of the ongoing trade negotiations between the U.S. and Canada.
Three scenarios were analyzed: maintaining current tariffs, the breakdown of the CUSMA agreement, and successful renegotiation of CUSMA leading to improved trade relations. If CUSMA were to end, an estimated 214,000 American and 102,000 Canadian jobs would be lost compared to the status quo. However, 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 U.S.-Canada trading relationship for both countries’ prosperity, stating that job security and stability are at stake.
According to the report, the breakdown of CUSMA would have significant GDP implications, projecting a loss of $1.04 trillion for the U.S. economy and $271 billion for Canada by 2035. Inflation rates would likely increase, and real disposable income growth would be hindered, especially in Canada.
Conversely, successful negotiations forecasted higher disposable income, lower inflation, and substantial GDP gains for both countries. The report highlighted potential job losses in manufacturing sectors, such as auto, wood product, and metal product manufacturing in the U.S., with adverse effects on states like Iowa, Michigan, Kentucky, and Alabama. In Canada, Quebec and Ontario would face the most significant impact on their manufacturing industries.
Efforts to Reach a Trade Agreement
As the deadline for new tariffs on Canadian products approaches, officials are striving to reach a deal to avert the tariffs before the looming deadline. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are engaged in discussions to present a potential trade deal to President Trump.
Burke expressed optimism about the ongoing talks and suggested that concessions might be necessary from both sides to reach an agreement. If the negotiations fail and new tariffs are imposed, central Canadian manufacturers are expected to be the most affected.
The looming trade tensions stem from issues like alleged U.S. dairy product discrimination, retaliatory auto tariffs, and provincial alcohol bans. Negotiators are exploring various strategic sectors to find common ground for a deal.
A recent report from Oxford Economics identified cement, concrete, paper products, wood, computers, electronics, plastics, and rubber manufacturing as the sectors likely to be hit hardest by tariffs. Provinces like Ontario, New Brunswick, and Quebec are projected to face the most significant impact due to their reliance on these sectors.
Tag: rewrite-pending
