Deloitte study warns of sharp economic hit for Canada if US quits CUSMA

Deloitte Canada released a study assessing the economic consequences for Canada if the United States were to exit the Canada-United-States-Mexico trade pact. In the “CUSMA Withdrawal Scenario,” trade would revert to WTO most-favoured-nation tariffs, including a 10% global tariff on previously exempt sectors, leading to a projected 1.6% decline in Canadian GDP by 2036 - roughly $402 billion over ten years - and an average loss of 163,000 jobs annually.

Manufacturing would be hit hardest, with a potential 28% drop in sectoral GDP, while oil and gas would see smaller declines. The alternative “Accelerated diversification” scenario assumes Canada keeps existing agreements and secures new ones, delivering a 0.6% GDP rise and about 53,000 new jobs per year, driven by growth in agriculture and certain manufacturing subsectors. The report stresses that boosting inter-provincial trade, expanding transport infrastructure, and developing critical-mineral projects could offset some negative effects. Deloitte’s co-author Matthew Stewart noted the difficulty of predicting U.S. policy shifts but expressed cautious optimism about future negotiations.