A recent report warns that potential disruptions to the Canada-U.S.-Mexico Agreement could result in significant job losses and economic repercussions on both sides of the border. The analysis, conducted by Oxford Economics for the Canadian American Business Council and released on Monday, examines the outcomes of various scenarios in the ongoing trade discussions between the U.S. and Canada.
In the event of the agreement’s collapse, the report projects job losses of 214,000 in the U.S. and 102,000 in Canada compared to maintaining the current tariff levels. However, successful renegotiation of the agreement could lead to job gains of 137,000 in the U.S. and 98,000 in Canada.
According to Beth Burke, CEO of the Canadian American Business Council, the findings underscore the critical nature of the trade relationship between the two countries for their mutual prosperity. The potential impacts extend beyond employment, with the breakdown scenario forecasted to cost the U.S. economy $1.04 trillion and Canada $271 billion by 2035. Inflation rates would likely rise, and real disposable income growth could be hindered, especially in Canada.
The report highlights that the worst-case scenario would heavily impact manufacturing industries in the U.S., including auto, wood product, and metal manufacturing sectors. Similarly, Quebec and Ontario would bear the brunt of the fallout in Canada’s manufacturing hubs if the agreement were to fail.
As the deadline approaches for new tariffs on Canadian exports, officials are striving to reach a deal to avert the potential economic consequences. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are engaged in discussions to present a possible trade agreement to President Donald Trump before the tariff deadline.
Burke emphasizes the importance of ongoing negotiations and suggests that concessions may be necessary from both sides to reach a resolution. Failure to reach a deal could lead to significant impacts on manufacturers, particularly in central Canada. A recent report from Oxford Economics indicates that cement, concrete, and paper product manufacturers would be most affected by the tariffs, with Ontario, New Brunswick, and Quebec facing the highest impact due to their reliance on these sectors.