Deloitte Report Warns CUSMA Collapse Would Devastate Canadian Economy

A Deloitte report warns that Canada's economy would suffer severe consequences if the US were to withdraw from the North American trade pact, CUSMA. According to the study, a worst-case scenario would see real GDP fall by 1.6% or $402 billion over the next decade, with employment shrinking by an average of 163,000 jobs annually. The manufacturing sector would bear the brunt, with motor vehicles and parts experiencing a 28% plunge in real GDP compared to the baseline.

The report's authors suggest that Canada must look beyond trade diversification to mitigate the effects of a US withdrawal from CUSMA. They recommend measures such as removing interprovincial trade barriers and fostering new industries to help make up for the lost economic activity. The study also highlights the importance of breaking down internal barriers and developing new areas of specialization at home.

The report models two scenarios: a worst-case scenario where CUSMA falls apart, and a best-case scenario where Canada maintains existing free-trade agreements while forging new ones. In the best-case scenario, real GDP would grow by 0.6% or $141 billion over the next decade, with almost 53,000 jobs created annually.