CUSMA breakdown could mean hundreds of thousands of jobs, a trillion dollars lost: report

As trade talks aimed at avoiding fresh U.S. tariffs continue, a new report is warning that the breakdown of the Canada-U.S.-Mexico Agreement would lead to hundreds of thousands of job losses and major economic impacts on both sides of the border.

The report , prepared for the Canadian American Business Council by Oxford Economics — an independent economic advisory firm — and released Monday, analyzed the likely result of three different outcomes of the ongoing trade talks between the U.S. and Canada.

The scenarios were a status quo situation where current tariffs remain in place, a scenario where the CUSMA agreement breaks down, and one where CUSMA is successfully renegotiated and the trading relationship improves.

In the event that CUSMA were to end, a projected 214,000 American and 102,000 Canadian jobs would be lost, the report said, compared to the status quo scenario.

But if CUSMA were renegotiated successfully, the U.S. and Canada stand to add jobs — 137,000 and 98,000 of them, respectively.

"It means real jobs and security and stability [lost] at a time where affordability is front and centre for so many Canadians and Americans," Beth Burke, the CEO of the Canadian American Business Council, told Power and Politics in an interview Tuesday.

Burke says the findings highlight just how important the trading relationship between the U.S. and Canada is to the success of both countries.

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The impacts also extend beyond jobs. According to the report's estimates, the breakdown scenario would impact the GDP of both countries, costing the U.S. economy $1.04 trillion US and costing Canada $271 billion Cdn by 2035.

The pace of inflation would likely pick up in both countries in the immediate and long-term, while growth of real disposable income would be stunted, especially on the Canadian side.

A successful negotiation paints the opposite picture in the report's projections — more disposable income for citizens on both sides of the border, slower inflation and GDP gains of billions for both countries.

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On the U.S. side, manufacturing industries would be hit hardest in the report's worst-case scenario — including losses in auto, wood product and metal product manufacturing. Hubs for that kind of work including Iowa, Michigan, Kentucky and Alabama would suffer as a result, the authors suggest.