As negotiations to prevent new U.S. tariffs continue, a recent study has cautioned about the potential consequences if the Canada-U.S.-Mexico Agreement were to collapse, resulting in significant job losses and economic ramifications on both sides of the border.
The study, commissioned by the Canadian American Business Council and conducted by Oxford Economics, an independent economic advisory firm, was unveiled on Monday. It assessed the potential outcomes of the ongoing trade discussions between the U.S. and Canada.
The study outlined three potential scenarios: maintaining current tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation of CUSMA leading to improved trade relations.
If CUSMA were to disintegrate, an estimated 214,000 jobs in the U.S. and 102,000 jobs in Canada would be lost compared to the status quo. Conversely, successful renegotiation could result in the creation of 137,000 jobs in the U.S. and 98,000 jobs in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the significance of the trading relationship between the two countries, noting the potential impact on job security and economic stability for both Canadians and Americans.
“This relationship is crucial,” Burke emphasized.
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The report indicates broader implications beyond job losses. In the event of a breakdown, both countries would experience negative impacts on GDP, with the U.S. facing a $1.04 trillion loss and Canada a $271 billion decline by 2035. Inflation rates would rise in the short and long term, while real disposable income growth, particularly in Canada, would be hindered.
Conversely, successful negotiations in the report forecast increased disposable income for citizens on both sides of the border, lower inflation rates, and substantial GDP gains for both nations.
