Deloitte Report Warns of Severe Impact on Canada's Economy if US Exits CUSMA

A new report by Deloitte Canada estimates that if the United States withdraws from the North American trade pact, Canada's economy would suffer a severe but not cataclysmic impact.

The report, titled 'Tariffs: A Rough Road Leads to New Destinations,' suggests that the U.S. accounted for about 70% of Canada's exports in 2025 and that a dissolution of CUSMA would lead to a 1.6% decline in real GDP over the next decade, or $402 billion.

The worst-case scenario would see manufacturing bearing the brunt, with motor vehicles and parts seeing a 28% plunge in real GDP compared to the baseline by 2036, while electronics, machinery and equipment would lose 21%, rubber and plastics products 20%, and chemicals 13%. The oil and gas sector would also be affected, with oil sales to the U.S. dropping 11% and natural gas seeing a 30% decline.

The report's authors suggest that Canada needs to look beyond trade diversification to make up for the difference, including removing interprovincial trade barriers and fostering new industries. They highlight Ottawa's investments in defense and support for new export infrastructure as positive steps, but also note that completely phasing out interprovincial trade barriers over five years would generate an additional $881 billion in economic output by 2040 and create 133,000 new jobs.