08/12/2026
# # # Canada-U.S. Trade Negotiations: Economic Stakes Rise Ahead of Tariff Deadline
A new economic report is raising the stakes in the ongoing Canada-U.S. trade negotiations, warning that a breakdown of the Canada-United States-Mexico Agreement (CUSMA) could result in hundreds of thousands of job losses and hundreds of billions of dollars in lost economic output across both countries.
Prepared by Oxford Economics for the Canadian American Business Council, the report examines three potential paths for the future of Canada-U.S. trade and highlights the significant economic consequences of the decisions currently facing both governments.
# # # If CUSMA Breaks Down
A deterioration in the trade relationship could have substantial consequences for both economies:
* **Canada could lose approximately 102,000 jobs.**
* **The United States could lose roughly 214,000 jobs.**
* **Canada could see approximately C$271 billion in lost GDP by 2035.**
* **The U.S. economy could lose around US$1.04 trillion in economic output.**
* Higher inflation and declining household disposable income could add further pressure on consumers.
# # # If CUSMA Is Successfully Renegotiated
A successful agreement could produce a significantly more positive economic outcome:
* **Canada could gain approximately 98,000 jobs.**
* **The United States could gain around 137,000 jobs.**
* Both economies could experience stronger economic growth.
* Inflationary pressures could ease.
* Household disposable incomes could improve.
The projections come as Canadian and American officials continue negotiations ahead of the **August 19 deadline**, when additional 50% U.S. tariffs could be imposed on a range of Canadian products.
Canadian Trade Minister Dominic LeBlanc has continued discussions with U.S. Trade Representative Jamieson Greer, while negotiators reportedly work toward a potential agreement that could be presented to President Donald Trump before the deadline.
# # # The Impact Would Not Be Equal Across Regions
The economic consequences could vary significantly by region and industry.
In Canada, **Ontario and Quebec**, two major manufacturing centres, could be among the hardest hit if the trade relationship deteriorates. Industries including automobiles, paper, wood products, computers and electronics, plastics, and rubber could face significant pressure.
In the United States, manufacturing-heavy states such as **Michigan, Iowa, Kentucky and Alabama** could also be exposed to the effects of higher tariffs and disrupted trade.
Another Oxford Economics analysis suggests that manufacturers facing the largest tariff increases, relying heavily on U.S. exports, and producing goods that can be easily replaced by competitors could face the greatest risks.
# # # More Than a Trade Dispute
The latest economic projections underscore how much is at stake in the Canada-U.S. negotiations.
The outcome could influence **jobs, consumer prices, household incomes, business investment and economic growth** on both sides of the border.
With the tariff deadline approaching, the central question is no longer simply about trade policy. It is about how much Canada and the United States are willing to compromise to protect one of the world's most important economic relationships—and what the economic cost could be if they fail to reach an agreement.
