Low Probability, High Cost: The Macroeconomics of Abandoning CUSMA
A Scotiabank analysis warns that failure to ratify CUSMA would push Canada into recession, and recommends patience — waiting for clearer signals from the review process before making major policy moves. The report looked at two worst-case scenarios if the deal collapses: a milder version where the U.S. imposes a 10% tariff on Canadian goods, slowing growth but avoiding a recession, and a severe version with 35% tariffs that would tip Canada into a full recession with widespread job losses. The bottom line is that while losing CUSMA would hurt both countries, Canada takes the bigger hit — and rushing into interest rate cuts or other policy responses before the outcome is clear could do more harm than good.
