Canada's Economy Would Take a Small Hit Without USMCA

The potential collapse of the United States-Mexico-Canada Agreement (USMCA) would have a surprisingly small impact on Canada's economy, according to a recent study by the Canadian American Business Council.

While the loss of 102,000 jobs and a one percentage point reduction in economic growth rate in 2027 would be significant, it's worth putting this number into perspective. With over 22 million people employed in Canada, losing 102,000 jobs would raise the unemployment rate to 6.9%, which is only slightly higher than the current rate of 6.4%.

The study suggests that even with high and long-lasting tariffs and counter-tariffs, Canada's economy would only be about 1.6-per-cent smaller in 2035 than if the USMCA were renewed and respected, and tariffs fell to near zero.

Canada has been negotiating from a position of strength, according to Prime Minister Mark Carney, who does not have to agree to any deal that is unfavorable to Canada. The country's best allies in this fight are U.S. businesses, particularly in integrated sectors like automotive, which understand that de-integrating continental supply chains simply raises costs and shrinks markets for American manufacturers.