USMCA & Tariff Impacts Report
The United States and Canada are each other’s largest trading partners, with close to US$1 trillion in goods and services crossing the border each year — a relationship built over four decades of deeply integrated supply chains in sectors such as autos, steel, aluminum, and energy. That relationship now faces its most serious test since it began: the July 1, 2026 deadline to formally extend the United States-Mexico-Canada Agreement (USMCA) passed without a renewal, leaving both countries in a period of prolonged trade uncertainty. Against this backdrop, the Canadian American Business Council (CABC) commissioned Oxford Economics to conduct an independent economic assessment of what is at stake as negotiations over the future of North American trade continue.
The analysis models three distinct scenarios. Under the Status Quo, elevated tariffs already in effect on steel, aluminum, and autos remain in place indefinitely. Under a Successful Renegotiation, USMCA is formally extended and most tariffs return to near-zero levels. Under a USMCA Breakdown, the agreement collapses entirely and broad-based tariffs are imposed across the vast majority of traded goods with the exception of energy products. The gap between the Breakdown and Successful Renegotiation scenarios represents the full range of outcomes still on the table — the difference between the worst and best cases for workers, businesses, and households on both sides of the border. The analysis finds that the costs of a USMCA breakdown fall hardest on manufacturing-intensive regions and sectors, and that these losses are largely permanent, as broken supply chains and lost investment are difficult and costly to reverse.