A new independent analysis commissioned by the Canadian American Business Council warns that a collapse of the Canada‑U.S.‑Mexico trade pact would have tangible and immediate effects on employment in Canada, with an estimated 102,000 jobs at risk should the agreement break down.
The study, prepared by Oxford Economics and released to inform debate around renegotiation scenarios, also projects that the United States would lose about 214,000 jobs in 2027 if CUSMA — the successor to NAFTA — were to end. Conversely, the report finds that a successful renegotiation could deliver notable employment gains: roughly 98,000 jobs in Canada and 137,000 jobs in the United States.
Where the pain would fall
The report identifies specific provinces and sectors likely to bear the deepest impacts. Among Canadian jurisdictions singled out as vulnerable are Ontario, Quebec, Manitoba and New Brunswick. On the U.S. side, states named include Michigan, Indiana, Washington and Iowa.
Industry exposures are concentrated in manufacturing and resource‑linked sectors. The analysis highlights the greatest risks in:
- Automotive production and parts
- Metals and machinery
- Electronics
- Chemicals
- Wood and paper products
Oxford Economics points out that the ripple effects would not be limited to tradeable manufacturing. Lower disposable income following job losses would reduce consumer spending, translating into weaker demand for services such as transportation, construction and professional services — amplifying the initial shock.
“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,”
The potential political and social consequences were noted by labour leaders. Bea Bruske, president of the Canadian Labour Congress, cautioned that workers should not become a bargaining chip in a trade standoff and urged governments to be prepared to defend jobs and communities that would be affected.
Numbers at a glance
| Scenario | United States (jobs) | Canada (jobs) |
|---|---|---|
| Breakdown of CUSMA (2027) | 214,000 | 102,000 |
| Successful renegotiation | 137,000 | 98,000 |
The report offers a cautionary note: while headline job counts help frame the magnitude of risk, regional and sectoral differences matter. Provinces with large integrated manufacturing supply chains — particularly in autos and machinery — would experience disproportionate losses if tariffs or other frictions were reimposed.
Business groups and policymakers face a narrow choice, the analysis suggests: press for a renegotiated deal that preserves integrated supply chains and jobs, or confront the tangible costs of disruption. The report’s authors say the economic consequences are real and that negotiators should proceed “with eyes wide open.”
For Canada, the stakes extend beyond aggregate job totals. The deeply integrated nature of cross‑border production means firms, workers and communities are tied to rules that facilitate just‑in‑time production and component flows. Any move that undermines that integration risks shifting investment patterns and supply chains — outcomes that can be slow to reverse.
Policymakers will also have to weigh the broader fiscal and social costs of unemployment and reduced activity in affected regions, and whether temporary support measures or longer‑term industrial policy will be needed should negotiations falter.
The Oxford Economics study was prepared for the Canadian American Business Council; the full analysis provides further detail on provincial and sectoral impacts and explores alternative negotiation outcomes. Its release is likely to sharpen pressure on negotiators to spell out contingency plans and define the red lines that would guide any talks with U.S. counterparts.
