A new economic analysis warns that the fallout could spread far beyond trade balances, raising prices and putting pressure on both governments.
Ending the free trade agreement between the United States and Canada could result in the loss of more than 300,000 jobs across the two countries. This scenario was analyzed by Oxford Economics in a report prepared for the Canadian American Business Council.
The United States could lose more than 200,000 jobs
According to analysts’ calculations, the United States could lose around 214,000 jobs as early as the year following the agreement’s expiration. Canada’s potential losses are estimated at 102,000 jobs.
Overall, the negative impact on the labor markets of the two countries could exceed 300,000 jobs. At the same time, preserving the trade arrangements and successfully concluding negotiations could create an additional 235,000 jobs in the United States and Canada.
Risks for the U.S. and Canadian economies
Ending the trade agreement could affect more than employment. Oxford Economics forecasts faster inflation in both countries, which would mean additional pressure on consumer prices and business costs.
The expected decline in U.S. gross domestic product is estimated at $1.04 trillion. According to the forecast, Canada’s economy could lose $208 billion in GDP.
Conversely, extending the free trade agreement between Ottawa and Washington could support economic growth, reduce risks to the labor market, and curb the pace of price increases.
Negotiations on the agreement’s future
Negotiations between Canada and the United States on the agreement’s future are taking place in a tense atmosphere. President Trump has repeatedly stated that he is considering the possibility of ending it.
Thus, the decision on the future of free trade between the United States and Canada will matter not only for bilateral economic relations, but also for millions of workers, businesses, and consumers on both sides of the border.