CUSMA Breakdown Could Cost Hundreds of Thousands of Jobs, Trillions in Economic Losses

A new report from Oxford Economics warns that a breakdown of the Canada-U.S.-Mexico Agreement (CUSMA) could lead to significant economic impacts on both sides of the border. The report, prepared for the Canadian American Business Council, analyzed three different outcomes of the ongoing trade talks between the U.S. and Canada.

According to the report, if CUSMA were to break down, a projected 214,000 American and 102,000 Canadian jobs would be lost. This is compared to the status quo scenario where current tariffs remain in place. A successful renegotiation of CUSMA could add jobs - 137,000 and 98,000 in the U.S. and Canada respectively.

The report also estimates that the breakdown scenario would impact the GDP of both countries, costing the U.S. economy $1.04 trillion US and costing Canada $271 billion Cdn by 2035. The pace of inflation would likely pick up in both countries in the immediate and long-term, while growth of real disposable income would be stunted.

The hardest-hit industries in a breakdown scenario would be manufacturing, particularly auto, wood product, and metal product manufacturing. Hubs for this kind of work including Iowa, Michigan, Kentucky, and Alabama would suffer as a result. In Canada, the manufacturing hubs of Quebec and Ontario would feel the pain most if CUSMA broke down.