A new report commissioned by the Canadian American Business Council says a successful renegotiation of the Canada-U.S.-Mexico Agreement could support job growth in both countries, while a breakdown of the trade pact would result in significant job losses relative to the status quo.
The report, Economic Impacts of US-Canada Tariff Escalation Under the USMCA, examines the current state of bilateral trade and the potential economic consequences of three outcomes from the ongoing USMCA review: a successful renegotiation, a breakdown of the agreement and the status quo.
Jobs and economic impact
The report estimates that a successful renegotiation would result in an additional 137,000 American jobs and 98,000 Canadian jobs in 2027 compared with the status quo.
A breakdown of the agreement, by contrast, would be accompanied by 214,000 fewer American jobs and 102,000 fewer Canadian jobs, according to the report.
“Successful renegotiation of USMCA would create an additional 137,000 American jobs and 98,000 Canadian jobs in 2027 relative to the status quo. By contrast, the breakdown of USMCA would be accompanied by 214,000 and 102,000 fewer jobs, respectively,” the report reads.
The report was independently commissioned by the CABC from Oxford Economics and uses quantitative analysis and research to assess the potential effects of the different scenarios.
It says economic integration between Canada and the United States has generated benefits for businesses, workers and consumers in both countries, while manufacturing industries would be the most affected across the scenarios examined.
The report also concludes that tariffs do not ultimately expand the American manufacturing sector or reduce the U.S. trade deficit.
Business relationship
Beth Burke, chief executive officer of the Canadian American Business Council, said the economic relationship between the two countries extends across multiple areas of business activity.
“The US-Canada relationship is one of the most integrated economic partnerships in the world, supporting millions of jobs, driving innovation, and strengthening our collective competitiveness,” said Burke. “This report highlights the extent of integration and how we are stronger together.”
The CABC said the findings come as Canada and the United States navigate the USMCA review and broader bilateral negotiations.
The organization said the report is intended to provide information for policymakers, business leaders and other stakeholders as negotiations continue.
Call for predictability
The CABC said its findings show that tariffs affect both countries and that the degree of economic integration between Canada and the United States makes policy decisions consequential for businesses on both sides of the border.
It said both governments should prioritize collaboration, predictability and policies aimed at supporting shared economic prosperity as negotiations continue.
“The choices made today will determine North America’s economic competitiveness for decades to come,” Burke added. “Businesses on both sides of the border are looking for predictability.”
The CABC said the report is intended to serve as a resource as policymakers, business leaders and other stakeholders consider the future of the bilateral economic relationship.
The council was established in 1987 and describes itself as a non-profit, non-partisan organization focused on dialogue between the public and private sectors in Canada and the United States. It said its members include business leaders and stakeholders from both countries and collectively employ about over 11.6 million people, with annual revenues of close to $6 trillion.
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