Amid ongoing trade discussions to avoid additional U.S. tariffs, a recent report cautions that the collapse of the Canada-U.S.-Mexico Agreement could result in significant job losses and substantial economic repercussions on both sides of the border.
The study, commissioned by the Canadian American Business Council and conducted by Oxford Economics, an independent economic advisory firm, was unveiled on Monday. It examined the potential outcomes of the current trade negotiations between the U.S. and Canada.
The report evaluated three scenarios: maintaining the existing tariff levels, the breakdown of the CUSMA agreement, and a successful renegotiation of CUSMA leading to an enhanced trade relationship.
If CUSMA were to disintegrate, the report projected job losses of 214,000 in the U.S. and 102,000 in Canada compared to the status quo. Conversely, successful renegotiation could result in job gains of 137,000 in the U.S. and 98,000 in Canada.
Beth Burke, the CEO of the Canadian American Business Council, emphasized the tangible impact on real jobs, stability, and security in light of the current economic challenges faced by many individuals in both countries.
Burke underscored the significance of the trading relationship between the U.S. and Canada for the prosperity of both nations.
The repercussions extend beyond employment figures. The report estimated that in a breakdown scenario, the GDP of both countries would suffer, with the U.S. economy projected to lose $1.04 trillion US and Canada $271 billion Cdn by 2035. Inflation rates would likely rise in the short and long term in both countries, while real disposable income growth, especially in Canada, would be hampered.
In contrast, successful negotiations would lead to increased disposable income for citizens on both sides of the border, lower inflation, and substantial GDP gains for both countries.
A report released by the Canadian American Business Council outlined the potential economic impacts of various outcomes of CUSMA negotiations. It revealed the precarious situation of hundreds of thousands of jobs in the ongoing trade talks. Power & Politics interviewed Beth Burke, CEO of the Canadian American Business Council, on the significance of the discussions in Washington.
The report highlighted that in the worst-case scenario, manufacturing sectors in the U.S. would be severely affected, including auto, wood product, and metal product manufacturing. States such as Iowa, Michigan, Kentucky, and Alabama, known for such industries, would bear the brunt of the impact.
In Canada, Quebec and Ontario, prominent manufacturing hubs, would experience significant repercussions if CUSMA were to fail, as the report indicated that the manufacturing sector would be hit hardest domestically as well.
Efforts Continue to Reach a Trade Agreement
The report’s release coincides with the looming Aug. 19 deadline for new 50% tariffs on several Canadian products, comprising approximately