Amid ongoing trade discussions to prevent imposing new U.S. tariffs, a recent report has cautioned about the potential ramifications of the collapse of the Canada-U.S.-Mexico Agreement, foreseeing significant job losses and economic repercussions on both sides of the border.
A study commissioned by the Canadian American Business Council and conducted by Oxford Economics, an independent economic advisory firm, and unveiled on Monday, evaluated the potential outcomes of the current trade negotiations between the U.S. and Canada.
The report examined three scenarios: the continuation of existing tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation leading to an improved trading relationship.
If CUSMA were to disintegrate, approximately 214,000 jobs in the U.S. and 102,000 jobs in Canada would be at risk of being lost compared to the status quo scenario, the report projected.
Conversely, a successful renegotiation of CUSMA could result in the creation of 137,000 jobs in the U.S. and 98,000 jobs in Canada.
“This equates to actual jobs and stability being jeopardized at a time when affordability is a top concern for many Canadians and Americans,” stated Beth Burke, the CEO of the Canadian American Business Council, in an interview with Power and Politics on Tuesday.
Burke emphasized the significance of the trading partnership between the U.S. and Canada for the prosperity of both nations.
“This partnership holds great importance,” Burke emphasized.
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Furthermore, the report highlighted that the repercussions extend beyond job losses. In the event of a breakdown, the GDP of both countries would be affected, with estimations indicating a loss of $1.04 trillion US for the U.S. economy and $271 billion Cdn for Canada by 2035.
Inflation rates are expected to rise in both nations in the short and long term, with a slowdown in real disposable income growth, particularly in Canada.
On the flip side, successful negotiations paint a more optimistic picture, projecting increased disposable income for citizens on both sides of the border, lower inflation rates, and substantial GDP gains for both countries.