As negotiations to avert additional U.S. tariffs progress, a recent study warns of the severe consequences of a potential breakdown in the Canada-U.S.-Mexico Agreement. The report, commissioned by the Canadian American Business Council and conducted by Oxford Economics, evaluated three potential outcomes of the ongoing trade discussions between the U.S. and Canada.
In the event of the agreement’s collapse, the report projected significant job losses, with an estimated 214,000 jobs in the U.S. and 102,000 in Canada at risk compared to the current status. Conversely, successful renegotiation of the agreement could result in job gains of 137,000 in the U.S. and 98,000 in Canada.
Beth Burke, CEO of the Canadian American Business Council, emphasized the importance of the trading relationship between the two nations, emphasizing the potential impact on job security and economic stability for both populations.
The study also outlined the broader economic implications, predicting substantial GDP losses for both countries if the agreement falters. Inflation rates are expected to rise, while growth in real disposable income, particularly in Canada, would be hindered.
In a breakdown scenario, manufacturing sectors in the U.S., including auto, wood product, and metal manufacturing, would be severely affected, impacting states like Iowa, Michigan, Kentucky, and Alabama. Similarly, Quebec and Ontario in Canada would face significant challenges due to their reliance on manufacturing industries.
As the deadline for new tariffs approaches, officials are working towards a resolution to prevent the impending economic fallout. Canadian Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer are actively engaged in discussions to potentially present a trade deal to President Donald Trump before the deadline.
While negotiations continue, concessions from both sides may be necessary to reach a mutually beneficial agreement. Failure to secure a deal could result in detrimental tariffs affecting manufacturers in central Canada, particularly in sectors such as cement, paper products, wood, computers, electronics, plastics, and rubber.
The study by Oxford Economics highlights the vulnerability of certain manufacturing sectors to tariff increases and underscores the potential regional impacts across provinces like Ontario, New Brunswick, and Quebec. Conversely, provinces like Saskatchewan, Alberta, and Newfoundland and Labrador are expected to be less impacted by the proposed tariffs.