Oxford Economics puts the decade-long output loss at $271 billion if the trade pact collapses
The gap between renewing the Canada-United States-Mexico Agreement and letting it collapse is worth roughly $523bn in Canadian economic output over the next decade.
That figure comes from a report Oxford Economics prepared for the Canadian American Business Council, and it marks the distance between the study's best case, a successful renegotiation, and its worst, a full breakdown of the trade pact.
A renewal would add about $253bn to Canadian GDP over 2026 to 2035 relative to holding current tariffs in place, the report says, while termination would strip out roughly $271bn.
On the American side, the same two paths are separated by about US$1.4tn.
Jobs follow the same split.
A breakdown would leave Canada with 102,000 fewer positions in 2027 and the United States with 214,000 fewer, Oxford Economics found, while a successful renegotiation would create 98,000 Canadian and 137,000 American jobs.
Roughly 1.4m American and 2.5m Canadian jobs already depend on the bilateral trade relationship.
For households, the report values a successful renegotiation over a breakdown at about US$516 a year for each American household and $846 for each Canadian one.
“That’s not insignificant, especially in a time where affordability is pinching everyone,” said Beth Burke, chief executive of the Canadian American Business Council, in an interview with The Canadian Press.
The study frames today’s tariff regime as costly in its own right.
“The status quo is not a neutral baseline,” the report says, arguing that current duties slow export growth and keep unemployment elevated in both countries.
According to Oxford Economics, the US effective tariff rate on Canadian goods now sits near 6.5 percent, up sharply from pre-2025 levels of around 1 percent, while Canada’s rate on US goods is about 1.9 percent.
A breakdown would push those rates to 10.5 percent and 5.9 percent respectively.
On the Canadian side, the sectors most exposed include autos, metals, machinery, electronics, chemicals, wood products and paper products, the report says, with Ontario, Quebec, Manitoba and New Brunswick among the hardest-hit provinces.
Unwinding four decades of 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.”
The findings land as a new round of 50 percent American tariffs on a range of Canadian goods is set to take effect August 19, with no carve-outs for products that comply with CUSMA.
Canada-US trade minister Dominic LeBlanc and chief trade negotiator Janice Charette returned to Washington this week for further talks.
LeBlanc said on social media Tuesday that the two 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 wrote.
Burke said she is “very cautiously optimistic” as officials keep meeting.
“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 told The Canadian Press.
Not everyone framed the moment the same way.
Workers cannot become a bargaining chip in a trade war they did not start, said Bea Bruske, president of the Canadian Labour Congress, in an email to Canadian Press.
“There are real jobs on the line, and the government needs to be ready to defend them,” she said, adding that protecting workers “cannot mean signing a bad deal because Donald Trump threatens to walk away.”
The most likely outcome is that tariffs simply persist, according to Julian Karaguesian, a lecturer at McGill University and former special adviser at Finance Canada.
He noted that Canadian trade with the United States has fallen while trade with other countries has risen.
Ottawa has set a target of doubling non-US exports over the next decade, and the government’s spring economic update reported non-US goods and services exports climbed $33bn in 2025 from a year earlier.
First-quarter non-US exports were worth $96.2bn, said Samantha Lafleur, a spokesperson for Global Affairs Canada.
A successful renegotiation would bring bilateral tariffs back near their pre-2025 level of about 1 percent, the report says, leaving only limited duties on steel, aluminum and Canadian dairy.
“The economic consequences are real and we should go into any negotiation with eyes wide open,” Burke said.
