As negotiations to prevent additional U.S. tariffs progress, a recent study cautions that the collapse of the Canada-U.S.-Mexico Agreement could result in significant job losses and severe economic consequences for both countries.
The study, commissioned by the Canadian American Business Council and conducted by Oxford Economics, an independent economic advisory firm, and released on Monday, evaluated the potential outcomes of ongoing trade discussions between the U.S. and Canada.
The study examined three scenarios: the maintenance of current tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation of CUSMA leading to improved trade relations.
If CUSMA were to disintegrate, the report projected the loss of approximately 214,000 jobs in the U.S. and 102,000 jobs in Canada compared to the status quo scenario.
Conversely, successful renegotiation of CUSMA could result in job gains of 137,000 in the U.S. and 98,000 in Canada.
“The potential job losses signify a tangible impact on employment, stability, and security, especially during a period where affordability is a critical concern for many Canadians and Americans,” stated Beth Burke, CEO of the Canadian American Business Council, during an interview with Power and Politics on Tuesday.
Burke emphasized the significance of the trading relationship between the U.S. and Canada for the prosperity of both nations.
“This relationship holds immense importance,” Burke stressed.
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The repercussions extend beyond job losses. The study’s estimates suggest that in the event of a breakdown, the GDP of both countries would be negatively affected, with the U.S. economy facing a $1.04 trillion loss and Canada a $271 billion decline by 2035.
Inflation rates are expected to rise in both countries in the short and long term, while real disposable income growth would be hindered, particularly in Canada.
Conversely, successful negotiations paint a contrasting picture in the study’s projections — anticipating increased disposable income for citizens on both sides of the border, reduced inflation rates, and significant GDP gains for both nations.