Canada could lose 102,000 jobs if the Canada-United States-Mexico Agreement collapses, according to a new report from Oxford Economics. The independent economic advisory firm prepared the analysis for the Canadian American Business Council, which released the findings Monday.
The report models three scenarios for the ongoing CUSMA talks. Keeping today’s tariffs in place forms the baseline. Against that baseline, a full collapse of the deal would leave the US 214,000 jobs short and Canada 102,000 by 2027. A successful renegotiation, by contrast, would put 137,000 more people to work in the US and 98,000 more in Canada that same year.
The renegotiation scenario also assumes bilateral tariffs settle back near their pre-2025 levels, about 1%, aside from continued duties on steel, aluminum and dairy, the report found. Oxford Economics puts the gap between that outcome and a full collapse at roughly $846 a year for the average Canadian household and $516 for the average US household, in each country’s own currency.
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The report cautioned against reading today’s tariff levels as a safe fallback. “The status quo is not a neutral baseline,” it said, arguing that even preserving current tariffs comes at a cost, curbing export growth and keeping joblessness higher than it would otherwise be on both sides of the border.
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A CUSMA collapse would hit Canada’s auto, metals, machinery, electronics, chemical, and wood and paper sectors hardest, the report found, with Ontario, Quebec, Manitoba and New Brunswick facing the deepest exposure.
On the US side, the damage is concentrated in metals, machinery, autos, transportation equipment, and wood products, with Michigan, Indiana, Washington, Arizona, Texas, Iowa, Kansas, Utah, and Alabama among the states facing the steepest impact. Many of the lost jobs would sit in manufacturing directly hit by tariffs. Still, services such as transportation, construction, and professional work would also lose ground as lower household spending ripples through both economies.
A separate, more immediate threat sits outside the three modelled scenarios. The US announced July 20 it would impose new 50% tariffs under Section 338 of the Tariff Act of 1930 on Canadian autos, alcohol and dairy products, citing unfair treatment of US industries. The tariffs take effect August 19 and would hit about $20.1 billion of Canadian exports, just over 5% of the total, an outcome Oxford Economics places somewhere between the status quo and a full CUSMA collapse in severity.
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Beth Burke, the business council’s chief executive, said in a Tuesday interview that the economic fallout is real and Canada should enter any negotiation clear-eyed about what’s on the line. She called the added household income from a successful renegotiation meaningful.
“That’s not insignificant, especially in a time where affordability is pinching everyone,” she said.
