Sep 10, 2026
If the United States walked away from CUSMA tomorrow, what would it actually cost Canadians? A new report from Deloitte Canada helps to illustrate the economic impact of America withdrawing from CUSMA — and while the consequences are significant, it’s not as big as initially anticipated.
According to the report, an American withdrawal from CUSMA would result in an economic output loss of $402 billion over the next decade, and translate into 163,000 fewer jobs per year, on average.
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Despite panic-filled social media feeds, Deloitte shows that the impact would be a “severe but not cataclysmic” hit to the nation’s overall economy.
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For Canadians whose paycheques and savings are tied to the sectors most exposed to the U.S. market, the report is a useful gut check on how bad “bad” could get — and what to do about it now.
Quick take
- A full U.S. exit from CUSMA could cost Canada $402 billion in lost GDP and 163,000 jobs a year on average through 2036
- Manufacturing (autos, machinery, chemicals) and oil and gas exports would be hit hardest
- Trade diversification could offset roughly a third of the job losses — not all of them
- A formal U.S. withdrawal needs six months’ notice, so there is no overnight shock
What would a U.S. exit from CUSMA actually trigger?
Deloitte’s downside scenario assumes the U.S. formally withdraws from the Canada-United States-Mexico Agreement (CUSMA), ending tariff exemptions across the board and resetting trade to World Trade Organization minimum rates, on top of the 10% global tariff the U.S. has already applied elsewhere.
Keep in mind, withdrawal from CUSMA by any party requires six months’ notice, which is why the report’s authors call it “a possibility that cannot be dismissed” — not a distant hypothetical.
Under this scenario, Canada’s real GDP would fall 1.6% by 2036 compared with keeping CUSMA intact — this equates to lost output worth $402 billion over the decade. Given the economic slowdown, employment growth would also slow, resulting in about 163,000 jobs a year lost, on average. This overall economic slowdown would drag wages and household spending down with it, compounding the negative effect on overall economic growth.
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Which paycheques take the biggest hit?
Unfortunately, the pain of the worst-case scenario would not be spread evenly. Manufacturing would get the deepest cuts, including:
- Motor vehicles and parts would see a real GDP drop of 28% by 2036 versus the baseline
- Electronics, machinery and equipment would experience a 21% drop
- Rubber and plastics would face a 20% decline
- Chemicals can expect a 13% drop
Canadians working in auto assembly, parts manufacturing, chemicals, or energy exports will definitely feel the pinch. Even without direct exposure, residents in Ontario, Quebec, Alberta or Saskatchewan will feel the weight of these economic constraints, given that larger portions of the population in these provinces are employed in exposed sectors.
Canada’s oil & gas industry would feel the heat
If CUSMA should stall and die on the negotiating table, Canada’s oil and gas sector would lose its tariff shield and become subject to the 10% U.S. tariff that’s applied to almost every other Canadian good.
Deloitte analysts anticipate that it would also prompt a reduction in oil exports to the U.S. — at an approximate 11% decline — while natural gas exports would drop by 30%. Despite double-digit declines, the net hit to GDP would be smaller — 0.4% for oil and 0.9% for natural gas — given current global turmoil and its impact on oil & gas prices.
Won’t trade diversification just fix this?
Over the last year, Canadians across multiple sectors and government institutions have worked hard to develop trade diversification for Canadian products and services. While there have been significant strides in developing global diversification, these new possibilities won’t fix the loss created by the collapse of the North American trade treaty.
What about the best-case scenario?
In Deloitte’s best-case scenario, Canada keeps CUSMA and every other existing trade deal while continuing to grow new global trade deals. If this occurs, Canada adds 0.6% to real GDP by 2036 — $141 billion in additional output and roughly 53,000 more jobs per year. Based on this analysis, the Deloitte report shows that while diversification helps, it doesn’t fully offset what a downside scenario could cost.
Could Canada offset the losses at home instead?
One overlooked lever is Canada’s own internal trade.
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Interprovincial exports made up just 18.1% of GDP in 2023, a share that has barely moved in three decades.
Deloitte research suggests fully phasing out interprovincial trade barriers over five years could add $881 billion in economic output by 2040 and create 133,000 jobs.
Deloitte partner Matthew Stewart told The Canadian Press he doubts Canada could capture all of that, but figures “we could at least achieve half of that,” which, combined with diversification, could offset most of the downside scenario’s damage.
What this means for your money and your job
None of this is a reason to sell Canadian investments or panic about a border you don’t control. But it does make an argument for understanding how exposed your savings and your income are to the ongoing trade war with the U.S.
If your income or your TFSA and RRSP holdings are concentrated in auto, machinery, chemicals or energy names, it’s worth checking how much of that weighting you’re comfortable carrying.
For example, a manufacturing worker earning $60,000 a year could see overtime and hours cut well before any layoff notice arrives. To prepare, build an emergency fund. This fund would help cushion the blow of lost hours and reduced pay, and give you time to adjust should trade wars not resolve promptly.
Bottom line
The real lesson from Deloitte’s modelling is that Canada can withstand America’s withdrawal from CUSMA — and it won’t fall or fail. But it’s also a reminder of the risk associated with single-market dependency.
For everyday Canadians, this report illustrates the importance of knowledge and preparation. Knowing which slice of your paycheque or portfolio carries exposure — and rebalancing before the next disruption instead of after — will help you weather this economic storm.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
