Amid ongoing trade discussions to avoid new U.S. tariffs, a recent report has cautioned about the potential consequences of a breakdown in the Canada-U.S.-Mexico Agreement, predicting substantial job losses and economic ramifications on both sides of the border.
The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, an independent economic advisory firm, was released on Monday. It evaluated the potential outcomes of the ongoing trade negotiations between the U.S. and Canada under three different scenarios.
The scenarios included the continuation of current tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation of CUSMA leading to improved trade relations.
If the CUSMA were to collapse, the report projected a loss of 214,000 jobs in the U.S. and 102,000 jobs in Canada compared to the status quo. Conversely, successful renegotiation could result in job gains of 137,000 in the U.S. and 98,000 in Canada.
“This signifies actual job losses and jeopardizes stability and security at a time when affordability is a primary concern for many Canadians and Americans,” stated Beth Burke, the CEO of the Canadian American Business Council, during an interview with Power and Politics on Tuesday.
Burke emphasized the crucial nature of the trading relationship between the U.S. and Canada for the prosperity of both nations.
“This relationship holds significant importance,” added Burke.
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The repercussions extend beyond job losses as per the report’s projections. In the event of a breakdown, both countries’ GDPs would suffer, causing a loss of $1.04 trillion for the U.S. and $271 billion for Canada by 2035.
Inflation rates are expected to rise in both countries in the short and long term, while growth in real disposable income would be hindered, particularly in Canada.
Conversely, successful negotiations are projected to boost disposable income for citizens on both sides of the border, curb inflation rates, and lead to substantial GDP gains for both nations.
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