Recent discussions to prevent additional U.S. tariffs are ongoing, with a new study cautioning about the consequences of the potential collapse of the Canada-U.S.-Mexico Agreement, forecasting significant job losses and economic effects on both sides of the border.
Commissioned by the Canadian American Business Council and conducted by Oxford Economics, an independent economic consulting firm, the analysis, released on Monday, examined three possible outcomes of the current trade negotiations between the U.S. and Canada.
The scenarios considered were the continuation of existing tariffs, a scenario where the CUSMA agreement fails, and one where CUSMA is successfully restructured, leading to improved trade relations.
If CUSMA were to dissolve, an estimated 214,000 jobs in the U.S. and 102,000 jobs in Canada would be at risk compared to the current tariff situation, the report highlighted.
Conversely, successful renegotiation of CUSMA could result in 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 tangible impact of these findings on job security and stability, particularly in a time when affordability is a top concern for many individuals in both countries.
According to Burke, the study underscores the vital nature of the trading partnership between the U.S. and Canada for the prosperity of both nations.
The repercussions extend beyond employment figures. The report projected that in a breakdown scenario, both countries would experience GDP declines, costing the U.S. economy $1.04 trillion and Canada $271 billion by 2035.
Inflation rates are expected to rise in the short and long term in both countries, while real disposable income growth, especially in Canada, would be hampered.
On the flip side, a successful negotiation, as outlined in the report’s projections, would lead to increased disposable income for citizens on both sides of the border, slower inflation rates, and substantial GDP gains for the countries.
An economic study released by the Canadian American Business Council examined the potential economic outcomes of different CUSMA negotiation results. The report warned about the precarious state of hundreds of thousands of jobs in the ongoing trade discussions. Power & Politics speaks with Beth Burke, CEO of the Canadian American Business Council, about the significance of the ongoing talks in Washington.
In the worst-case scenario outlined in the report, manufacturing sectors in the U.S., including auto, wood product, and metal product manufacturing, would bear the brunt of the impact. States like Iowa, Michigan, Kentucky, and Alabama would be particularly affected, according to the authors.
In Canada, Quebec and Ontario would be most affected if CUSMA were to collapse, with the report indicating that domestic manufacturing industries would suffer the most.
Efforts to Secure a Deal
The analysis coincides with the approaching August 19 deadline for potential 50% tariffs on various Canadian goods, constituting around five percent of Canada’s exports to the U.S.
Negotiations are ongoing to reach an