Canada could lose 102,000 jobs if the Canada-U.S.-Mexico agreement on trade breaks down, a new report warns.
The report, prepared for the Canadian American Business Council by Oxford Economics, studied the potential economic consequences of various CUSMA scenarios, including termination of the deal.
The report says the United States would lose 214,000 jobs in 2027 if CUSMA died.
“Many of these jobs would be in manufacturing industries directly impacted by tariffs, but the service sector would also feel the impact as lower disposable income causes households to reduce consumer spending and lower trade, and investment reduces demand for transportation, construction and professional services,” says the report.
The successful renegotiation of CUSMA, it says, would create 137,000 American jobs and 98,000 Canadian jobs.
“The status quo is not a neutral baseline,” said the report. “Even holding today’s tariffs in place slows export growth and keeps unemployment elevated in both countries.”
Bea Bruske, president of the Canadian Labour Congress, said in an email that Canadian workers can’t be a bargaining chip in a trade war they didn’t start.
“There are real jobs on the line, and the government needs to be ready to defend them,” she said. “But protecting Canadian workers cannot mean signing a bad deal because Donald Trump threatens to walk away. Canada needs to know what it is fighting for, where the red lines are, and what the plan is to protect workers and communities if the U.S. walks away.”
The report says the provinces and states affected most by the loss of CUSMA would include Ontario, Quebec, Manitoba, New Brunswick, Michigan, Indiana, Washington and Iowa.
For Canada, the industries facing the deepest impacts from the loss of CUSMA would include autos, metals, machinery, electronics, chemicals, wood products and paper products, the report says.
“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 Tuesday.
The report said a successful renegotiation of the deal would be worth approximately $516 per U.S. household and $846 in Canadian dollars per Canadian household each year.
“That’s not insignificant, especially in a time where affordability is pinching everyone,” she said.
A new round of 50 per cent American tariffs on a range of Canadian goods is set to take effect on Aug. 19.
Unlike most of U.S President Donald Trump’s other tariffs, these would have no exemptions for goods that comply with CUSMA.
Canada-U.S. Trade Minister Dominic LeBlanc and Janice Charette, Canada’s chief trade negotiator, are back in Washington this week for another round of trade talks.
LeBlanc said on social media Tuesday that they 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,” he said.
On Sunday, LeBlanc’s spokesman Gabriel Brunet said talks have broadly covered the threatened new duties, existing sectoral tariffs and renegotiations of CUSMA.
Burke said she’s “very cautiously optimistic” as officials continue to meet.
“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.
The report says an estimated 1.4 million American jobs and 2.5 million Canadian jobs depend on the bilateral trade relationship.
“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,” it says.
Julian Karaguesian, a lecturer at McGill University and former special adviser at Finance Canada, said the most likely scenario is that tariffs are maintained.
He added that while Canada’s trade with the U.S. is down, it’s trade with non-U.S. countries is increasing.
The Liberals have set a goal of doubling non-U.S. exports over the next decade.
The government’s spring economic update said non-U.S. goods and services exports increased by $33 billion in 2025 over 2024.
Samantha Lafleur, a spokesperson for Global Affairs Canada, said in an email last month that in the first quarter of this year, non-U.S. exports of goods and services were worth $96.2 billion.
The report says current tariffs represent a “significant departure” from pre-2025 levels.
“However, the termination of (CUSMA) would result in large increases in both countries’ tariffs,” the report warns.
“A successful renegotiation of (CUSMA) would cause bilateral tariffs to fall close to their pre-2025 levels of around one per cent, as in this scenario only limited additional tariffs are assumed to remain on steel, aluminum and Canadian dairy.”
This report by The Canadian Press was first published Aug. 11, 2026.
By Catherine Morrison | Copyright 2026, The Canadian Press. All rights reserved.