JAY GOLDBERG: Carney’s new world order could cost Canadians 100,000 jobs

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What would the Canadian economy look like without free trade with the U.S.?

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That’s a question a lot of Canadians have been asking as U.S. President Donald Trump has imposed a raft of tariffs on the Canadian economy, only to see the Liberal governments of former prime minister Justin Trudeau and later Prime Minister Mark Carney respond in kind.

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While difficult to quantify, the Canadian American Business Council (CABC) decided to commission Oxford Economics to study exactly what kind of damage the Canadian and American economies would sustain without free trade between the two countries.

Here at home, Carney has suggested Canada can no longer rely on its relationship with the U.S. to plan its economic future, a new global economic world order is emerging, and Canada must look elsewhere to generate future economic growth.

But the reality is the economic carnage that would be done to the Canadian economy should Canada lose the deeply integrated partnership built with the U.S. over the past four decades would be profound, and our politicians must do everything possible to avoid it. The CABC presents three possible scenarios for future relations between Canada and the U.S.: a successful renegotiation of the USMCA, the status quo of higher tariffs on certain goods, and the complete breakdown of the USMCA.

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Costly collapse

Should free trade between Canada and the U.S. collapse, Oxford Economics expects the Canadian economy to lose 102,000 jobs in 2027 alone and $271 billion in GDP over the next decade. The average household would also see a loss of nearly $6,000 over the next 10 years.

Such a scenario would cause nothing short of a depression in the Canadian economy. Losing more than 100,000 jobs in the span of a single year due to the collapse of the USMCA should be raising alarm bells for politicians in their ivory towers in Ottawa. For all the talk of diversification — which is a laudable goal in theory — Canada simply cannot afford to lose so many jobs, let alone take such a big GDP hit and see the average household lose out on $600 a year.

The flipside is the upside to a successful renegotiation. Should the USMCA be successfully renegotiated, which would see the tariffs imposed over the past year and half disappear, Canada could gain 98,000 jobs, see $253 billion in GDP growth over the next decade, and see household income rise by just over $4,000 over the next 10 years.

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These are the stakes. Whatever one thinks of the Trump administration, the difference between a positive future relationship with Washington and a negative one means the difference between gaining or losing roughly 100,000 jobs and more than $250 billion in positive or negative impact on the Canadian economy over the next decade.

Yes, Trump has said mean things about Canada. Yes, he’s trying to rename a lake. But does that mean politicians in Ottawa should simply throw in the towel and risk the livelihoods of 100,000 of our fellow Canadians to pursue some “new world order”?

The answer, obviously, is no.

Can Ottawa give Trump everything he wants?

Probably not, nor should we. Canada’s economic interests must be protected.

Nonetheless, the Carney government should stop its talk about a new economic world order and stop pretending it makes sense in the short term or the long term to try to replace the U.S. as Canada’s top trading partner.

Optimism has faded

Diversification makes sense as an economic strategy. Deliberately deciding to trade barbs with Trump and lose a special economic relationship that’s taken four decades, if not more than a century, to build, does not.

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When Carney first took office, things were looking up for the Canada-U.S. relationship. The emotions of the Trudeau era seemed to have passed. Carney told Canadians he was the man to negotiate with Trump. But in the interim, optimism has faded, insults have been traded, and Carney has indicated Canada should look elsewhere.

The CABC report shows this kind of thinking is shortsighted. Canada should not give up on its relationship with the U.S. because of the rhetoric of a single president. It’s time for the Carney government to do what it can to get back to the negotiating table, negotiate a deal that both sides can live with, or at a minimum preserve the status quo until the U.S. administration is ready to strike a deal that Canada can accept.

But any talk about ending the Canada-U.S. relationship for good or throwing in the towel on free trade is foolhardy. It will cost jobs and livelihoods. Free trade with the U.S. has served Canadians well for decades and will do so for decades to come. It’s time for our politicians to remember that.

Jay Goldberg is the North American Affairs Manager at the Consumer Choice Center

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