Canada could lose an estimated 102,000 jobs if the Canada-U.S.-Mexico trade agreement, known as CUSMA, is terminated, according to a new economic report examining the consequences of different scenarios for the North American trade pact.
Prepared by Oxford Economics for the Canadian American Business Council, the report assesses the potential economic impact of maintaining the current situation, renegotiating the agreement or allowing CUSMA to expire.
The United States could face an even larger employment shock, with an estimated 214,000 American jobs at risk in 2027 if the agreement were to collapse.
Manufacturing would bear much of the immediate impact because of its exposure to tariffs. However, the consequences would extend well beyond factories. The report says weaker household disposable income could reduce consumer spending, while lower trade and investment would also cut demand for transportation, construction and professional services.
A successful renegotiation, by contrast, could support the creation of approximately 137,000 jobs in the United States and 98,000 in Canada.
“The status quo is not a neutral baseline,” the report says, noting that even maintaining current tariffs would slow export growth and keep unemployment elevated in both countries.
Workers at the centre of the trade dispute
Bea Bruske, president of the Canadian Labour Congress, warned that Canadian workers should not become bargaining tools in a trade conflict they did not initiate.
“There are real jobs on the line, and the government needs to be ready to defend them,” she said in an email.
At the same time, Bruske cautioned against accepting an unfavourable agreement simply because U.S. President Donald Trump has threatened to withdraw from CUSMA. She said Canada needs to establish clear objectives, define its red lines and have a concrete strategy to protect workers and communities if Washington ultimately walks away.
The economic effects would be particularly significant in several Canadian provinces and U.S. states. The report identifies Ontario, Quebec, Manitoba and New Brunswick in Canada, along with Michigan, Indiana, Washington and Iowa in the United States, as among the areas most exposed to the loss of CUSMA.
In Canada, the industries expected to experience the deepest effects include automotive manufacturing, metals, machinery, electronics, chemicals, wood products and paper products.
“The economic consequences are real and we should go into any negotiation with eyes wide open,” Beth Burke, CEO of the Canadian American Business Council, said in an interview.
Renegotiation could deliver household gains
The report estimates that a successful renegotiation of CUSMA could be worth about US$516 per U.S. household annually and C$846 per Canadian household each year.
Burke said those amounts should not be dismissed, particularly as households continue to face affordability pressures.
“That’s not insignificant, especially in a time where affordability is pinching everyone,” she said.
The stakes are rising as a new round of 50 per cent U.S. tariffs on a range of Canadian goods is scheduled to take effect Aug. 19. Unlike many of President Donald Trump’s other tariffs, the new duties would not exempt goods that comply with CUSMA.
Canada-U.S. Trade Minister Dominic LeBlanc and Canada’s chief trade negotiator, Janice Charette, returned to Washington last week for another round of negotiations.
LeBlanc said on social media that the Canadian officials met with United States Trade Representative Jamieson Greer.
“Discussions remain ongoing, and we continue to engage at the negotiation table to firmly advance and defend Canadian interests,” LeBlanc said.
His spokesman, Gabriel Brunet, said the discussions have broadly addressed the threatened new duties, existing sector-specific tariffs and the renegotiation of CUSMA.
Burke described herself as “very cautiously optimistic” as negotiations continue.
“Every time they get together and hash out and have more meaningful substantive conversations is another step towards getting to the right place on an agreement,” she said.
Billions of dollars and millions of jobs at stake
The report estimates that roughly 1.4 million American jobs and 2.5 million Canadian jobs depend on the bilateral trade relationship between the two countries.
It also warns that dismantling decades of economic integration would involve costs that go beyond the immediate impact of tariffs.
“Reversing this integration would not merely remove its direct benefits but would also impose substantial transition costs on businesses forced to rebuild intricate supply chains created over decades and incur long-run efficiency losses,” the report says.
Julian Karaguesian, a lecturer at McGill University and former special adviser at Finance Canada, said the most likely outcome is that existing tariffs remain in place.
While Canadian trade with the United States has declined, Karaguesian noted that trade with countries outside the U.S. is growing.
The Liberal government has set a target of doubling Canada’s non-U.S. exports over the next decade. According to the government’s spring economic update, exports of goods and services to markets outside the United States increased by $33 billion in 2025 compared with 2024.
Samantha Lafleur, a spokesperson for Global Affairs Canada, said in an email last month that non-U.S. exports of goods and services reached $96.2 billion in the first quarter of this year.
CUSMA remains central to North American trade
The Oxford Economics report describes current tariffs as a “significant departure” from the levels that existed before 2025. However, it warns that terminating CUSMA would push tariffs significantly higher in both countries.
A successful renegotiation would have the opposite effect, with bilateral tariffs expected to fall close to their pre-2025 level of roughly one per cent.
Under that scenario, the report assumes that only limited additional tariffs would remain on steel, aluminum and Canadian dairy products.
For businesses operating across North American supply chains, the outcome of the negotiations could therefore determine not only future tariff costs but also employment, investment decisions and the stability of long-established trade networks.
