CUSMA Breakdown Could Cost US Trillion-Dollars in Lost Trade

A new report from Oxford Economics warns that the breakdown of the Canada-U.S.-Mexico Agreement (CUSMA) would lead to significant economic losses and job cuts on both sides of the border. The study analyzed three possible outcomes: a status quo situation with current tariffs in place, a scenario where CUSMA breaks down, and one where the agreement is successfully renegotiated and trade relations improve.

According to the report, if CUSMA were to end, around 214,000 American jobs and 102,000 Canadian jobs would be lost compared to the status quo scenario. In contrast, a successful negotiation could lead to job gains of 137,000 in the U.S. and 98,000 in Canada.

The economic impacts would also be substantial, with the breakdown scenario estimated to cost the U.S. economy $1.04 trillion by 2035 and Canada's GDP $271 billion Cdn by 2035. The report predicts that inflation would rise on both sides of the border, while growth of real disposable income would slow down.

Manufacturing industries in the U.S., particularly in auto, wood product, and metal product sectors, as well as those in Canada, such as Quebec and Ontario, would be hit hardest if CUSMA breaks down. Trade Minister Dominic LeBlanc is set to meet with his U.S. counterpart to discuss a possible deal.