A recent report has raised concerns about the potential consequences of the collapse of the Canada-U.S.-Mexico Agreement (CUSMA) on job losses and economic repercussions for both countries. The analysis, conducted by Oxford Economics for the Canadian American Business Council and released this week, examined the outcomes of various scenarios in the ongoing trade discussions between the U.S. and Canada.

If CUSMA were to fail, the report predicts significant job losses with 214,000 jobs in the U.S. and 102,000 in Canada at risk compared to the status quo. Conversely, a successful renegotiation of CUSMA could lead to job gains of 137,000 in the U.S. and 98,000 in Canada.

Beth Burke, CEO of the Canadian American Business Council, emphasized the importance of the U.S.-Canada trading relationship for both nations’ prosperity. The report also forecasts substantial impacts on the GDP of both countries if CUSMA collapses, estimating losses of $1.04 trillion for the U.S. and $271 billion for Canada by 2035. Inflation rates are expected to rise, and real disposable income growth could be hindered, particularly in Canada.

In the worst-case scenario described in the report, manufacturing industries in the U.S., including auto, wood products, and metal manufacturing, would be severely affected, impacting states like Iowa, Michigan, Kentucky, and Alabama. In Canada, Quebec and Ontario’s manufacturing sectors would bear the brunt of the fallout if CUSMA fails.

Amidst looming deadlines for new tariffs on Canadian exports, trade representatives are actively working to reach a deal to avert these tariffs. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are engaged in discussions, aiming to present a potential trade agreement to President Trump before the tariff deadline.

Burke expressed optimism about the ongoing negotiations, highlighting the necessity for concessions from both sides to secure a deal. Failure to reach an agreement could result in significant impacts on manufacturers in central Canada, particularly in sectors like cement, concrete, paper products, wood, computers, electronics, plastics, and rubber. The report suggests that provinces like Ontario, New Brunswick, and Quebec would be most affected due to their reliance on these manufacturing industries.