A new Oxford Economics analysis sets out the full economic cost of a failed CUSMA renegotiation for Canada
Canada could lose 102,000 jobs and $271 billion in gross domestic product by 2035 if the Canada-United States-Mexico Agreement (CUSMA) collapses, according to a new independent economic analysis that arrives just days before a fresh round of US tariffs is due to take effect.
The Canadian American Business Council (CABC) released the report, commissioned from Oxford Economics, an independent economic advisory firm, examining three possible outcomes of the ongoing CUSMA renegotiation: a status quo scenario in which current tariffs remain in place, an outright breakdown of the agreement, and a successful renegotiation.
The numbers are unambiguous. A CUSMA collapse would leave Canada short 102,000 jobs in 2027 relative to the status quo, while the United States would absorb 214,000 job losses over the same period.
Over the longer term, the Canadian economy would contract by an estimated $271 billion CAD by 2035, with the US economy losing $1.04 trillion USD.
"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 Beth Burke, chief executive officer of the Canadian American Business Council in Washington, D.C.
"This report highlights the extent of integration and how we are stronger together."
A successful renegotiation reverses that trajectory. The report projects a net gain of 98,000 Canadian jobs and 137,000 American jobs in 2027 in that scenario, along with slower inflation and higher real disposable income on both sides of the border.
The Bank of Canada says 96% of surveyed financial market participants view rising trade tensions as the top downside risk to Canada's economy, while inflation and interest rate expectations remain in focus.https://t.co/UF9M72ZdJ8
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 28, 2026
What the numbers mean for housing and lending
For brokers, the report's manufacturing findings carry particular weight. Ontario and Quebec, Canada's largest manufacturing provinces, face the heaviest losses under a breakdown. Auto, wood product, and metal product manufacturing were cited as the most exposed sectors.
Manitoba and New Brunswick also appear among the hardest-hit provinces. Those same industries drive the construction material costs that are already squeezing new housing supply.
How CUSMA uncertainty has kept the Bank of Canada on hold and fixed mortgage rates elevated since October 2025 is a thread running through the report's economic modelling.
A breakdown scenario would accelerate inflation in both countries while stunting real disposable income growth, conditions that further delay the rate relief a significant pool of prospective buyers is waiting on.
Aug. 19 deadline adds urgency
The report arrives as the Aug. 19 deadline for a new round of 50% US tariffs on Canadian goods looms. Unlike most existing US tariffs under the current administration, these new levies would carry no CUSMA exemptions, targeting approximately 5% of Canada's exports to the US — including honey, plywood, and hyacinth bulbs.
Canada-US Trade Minister Dominic LeBlanc was scheduled to meet US Trade Representative Jamieson Greer on Tuesday, their third meeting in three weeks. Sources briefed on negotiations indicated both sides were aiming to present a possible deal to US President Donald Trump as early as Monday, ahead of the tariff trigger date.
"The choices made today will determine North America's economic competitiveness for decades to come," Burke said.
"Businesses on both sides of the border are looking for predictability."
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