A breakdown of the Canada-U.S. trade agreement would cost jobs, reduce exports and disrupt highly integrated supply chains on both sides of the border, according to a new report commissioned by the Canadian American Business Council.
Undertaken by Oxford Economics, the study examines three possible outcomes for the Canada-U.S.-Mexico Agreement (CUSMA): continuation of the current tariff environment, a successful renegotiation that restores most tariffs to near-zero levels, and a complete breakdown that brings broad new duties across most goods.
Compared with the status quo, a successful renegotiation would add an estimated 137,000 U.S. jobs and 98,000 Canadian jobs in 2027. A breakdown, by contrast, would leave the U.S. with 214,000 fewer jobs and Canada with 102,000 fewer. Over 2026-35, successful negotiations would add US$432 billion to U.S. GDP and C$253 billion to Canadian GDP, while a collapse would reduce GDP by US$1 trillion and C$271 billion, respectively.
Exports would also suffer. By 2035, the report estimates a CUSMA breakdown would reduce U.S. exports by US$150 billion and Canadian exports by C$49 billion relative to the status quo. Manufacturing would bear the heaviest losses, particularly autos, metals, machinery, and other closely integrated industries.
Agriculture would not escape the fallout. The report notes that agricultural regions on both sides of the border are highly interconnected. Minnesota, Wisconsin, Iowa and the Dakotas count Canada as an important market for grain, pork and processed foods, while Manitoba supplies agricultural commodities to the U.S. Midwest and relies on U.S. markets for machinery and crop inputs.
Under the report’s status-quo scenario, Canadian agriculture, forestry and fishing face relatively little additional tariff pressure. However, a full CUSMA breakdown would remove many existing exemptions and impose meaningful new tariffs on agriculture and food-related trade. Manitoba, New Brunswick and Prince Edward Island would face substantial long-term pressure partly because agriculture and food and beverage manufacturing would be hit, the study said.
Saskatchewan would be less affected overall because oil, potash and critical minerals remain tariff-exempt in the model, but its agriculture and forestry sectors would still suffer. The report specifically identifies canola and lentils among Saskatchewan products facing higher duties and a meaningful pullback under a CUSMA breakdown.
The full report is available here:
https://cabc.co/wp-content/uploads/2026/08/CABC_Impact-US-Canada-Tariff-FULL-VERSIONpdf.pdf
