CUSMA Breakdown Could Lead to Massive Job Losses, Economic Impacts

A new report by Oxford Economics warns that the breakdown of the Canada-U.S.-Mexico Agreement (CUSMA) could lead to hundreds of thousands of job losses and 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: a status quo situation where current tariffs remain in place, a scenario where CUSMA breaks down, and one where CUSMA is successfully renegotiated and the trading relationship improves.

In the event that CUSMA were to end, a projected 214,000 American and 102,000 Canadian jobs would be lost, compared to the status quo scenario. However, if CUSMA were renegotiated successfully, the U.S. and Canada stand to add jobs, 137,000 and 98,000 of them, respectively.

The impacts extend beyond jobs, with the breakdown scenario estimated to cost the U.S. economy $1.04 trillion US by 2035 and costing Canada $271 billion Cdn. The pace of inflation would likely pick up in both countries, while growth of real disposable income would be stunted, especially on the Canadian side.