CUSMA Withdrawal Would Slam Canadian Economy but Diversification Offers Hope

A recent report by Deloitte Canada found that a US withdrawal from the Canada-United-States-Mexico trade agreement (CUSMA) would have severe but not cataclysmic effects on Canada's economy.

The 'Tariffs: A rough road leads to new destinations' report imagines two scenarios for the future. In the first, the US opts out of CUSMA entirely and imposes a 10% global tariff on previously exempt sectors like oil and gas.

Under this scenario, Canadian GDP would fall 1.6% by 2036 compared to July 2025 levels, representing $402 billion in lost GDP over the decade. The report also predicts a 28% drop in manufacturing GDP and significant job losses across various sectors.

The second scenario envisions 'Accelerated diversification', where Canada maintains existing free trade agreements while successfully negotiating new ones elsewhere. In this best-case scenario, Canadian GDP would grow by 0.6% by 2036, with agriculture emerging as a key growth sector due to increased exports to non-US markets.