Amid ongoing trade discussions to avoid additional U.S. tariffs, a fresh report cautions about the potential consequences of the collapse of the Canada-U.S.-Mexico Agreement, predicting significant job losses and economic repercussions 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 unveiled on Monday. It examined three possible outcomes of the ongoing trade negotiations between the U.S. and Canada.
The report outlined scenarios including the continuation of current tariffs, a breakdown of the CUSMA agreement, and a successful renegotiation of CUSMA leading to improved trade relations.
If CUSMA were to collapse, the report projected losses of 214,000 jobs in the U.S. and 102,000 jobs in Canada compared to the status quo. However, successful renegotiation could potentially create 137,000 jobs in the U.S. and 98,000 jobs in Canada.
“It signifies tangible job losses and jeopardizes stability and security at a time when affordability is a significant concern for many individuals in both Canada and the U.S.,” remarked Beth Burke, the CEO of the Canadian American Business Council, during an interview with Power and Politics on Tuesday.
Burke emphasized the crucial role of the trade relationship between the U.S. and Canada for the prosperity of both nations.
“This relationship is of utmost importance,” Burke emphasized.
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The repercussions extend beyond job losses. According to the report’s projections, the breakdown scenario could cost the U.S. economy $1.04 trillion USD and Canada $271 billion CAD by 2035. Inflation rates would likely rise in both countries in the short and long term, while real disposable income growth would be hampered, particularly in Canada.
Conversely, successful negotiations in the report’s forecasts paint a different picture — increased disposable income for citizens on both sides of the border, slower inflation, and substantial GDP gains for both countries.