Deloitte Models Economic Costs of a Potential U.S. Withdrawal From CUSMA

A Deloitte Canada report released September 3 examines a downside case in which the United States withdraws from CUSMA and Canada loses preferential access to its principal export market. The study does not report a U.S. withdrawal decision; it frames the agreement’s dissolution as a risk that cannot be ruled out and measures the outcome against a baseline retaining CUSMA and U.S. tariff levels prevailing on July 1. [1]

Deloitte estimates that, under this hypothetical outcome, Canadian real GDP would be 1.6% lower over the next decade than in its baseline, equivalent to a $402 billion shortfall. Average annual employment would be 163,000 lower, with resulting weakness in wages and household spending. Canada’s exposure is amplified by the U.S. market’s share of its exports, estimated at about 70% in 2025. [1]

The largest modeled losses are in manufacturing. Deloitte projects real GDP in motor vehicles and parts would be 28% below the baseline by 2036, while electronics, machinery and equipment would be down 21%, rubber and plastics 20%, and chemicals 13%. Those figures are scenario projections rather than observed reductions in output, exports, or jobs. [1]

The report also models a change in energy’s tariff treatment if CUSMA ended. Oil and gas would no longer be protected from a 10% U.S. global tariff in Deloitte’s scenario, reducing Canadian oil sales to the United States by 11% and natural-gas sales by 30% relative to the baseline. [1]

In Deloitte’s more favourable case, Canada preserves its existing trade agreements, including CUSMA, and broadens trade relationships with other partners. That scenario produces modeled real-GDP growth of 0.6%, or $141 billion, over a decade and almost 53,000 additional jobs per year; agriculture, particularly through expanded trade with China and India, and some manufacturing activity would benefit. The authors caution that diversification gains remain smaller than the modeled cost of disrupted preferential U.S. trade. [1]

Deloitte argues that opening new export markets would need to be paired with domestic reforms, including reduced interprovincial barriers, export infrastructure, critical-minerals refining, and new areas of specialization. It cites earlier Deloitte work estimating that fully removing internal trade barriers over five years could add $881 billion in output by 2040, although a report co-author said the full result would be difficult to achieve. [1]