Economic Impacts of US-Canada Tariff Escalation Under the USMCA
Commissioned by Canadian American Business Council (CABC)
The United States and Canada share one of the most economically integrated bilateral relationships in the world, built over four decades of free trade.
This relationship is now under significant stress as the July 1, 2026, deadline to extend the United States-Mexico-Canada Agreement (USMCA) has passed without renewal, triggering a period of annual reviews and sustained uncertainty for businesses and investors on both sides of the border.
To understand the potential ramifications of changes in the economic relationship between the US and Canada, the Canadian American Business Council (CABC) commissioned Oxford Economics to undertake a study which takes stock of the US-Canada commercial relationship and assesses the likely economic consequences of three distinct potential outcomes of USMCA negotiations. The study utilizes a sophisticated, multi-model approach to quantify the risks of a potential dissolution of USMCA against the upside of a successful renegotiation of the agreement, both measured against a status quo scenario anchored to the bilateral tariff regime in effect in mid-2026, with impacts assessed across industries and down to the state and province levels.
The experts behind the research
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Michael KleimanHead of Macro Consulting, Americas
Michael Kleiman is an Associate Director and leads the Macroeconomic Consulting team in North America. Since joining Oxford Economics in 2014 Mike has led a variety of consulting projects, including assessments of trade policy, energy policy, and climate regulation. Mike also led the development of Oxford Economics’ Canadian Provincial and Territorial Model (CPTM), a large-scale, detailed bottom-up model of the Canadian economy covering all thirteen provinces and territories.
Prior to joining Oxford Economics, Mike worked as an economist in the New York representative office of the Banca d'Italia covering macroeconomic, political, and financial system issues in the United States, Canada, and Mexico. He holds a Masters degree in Economics from New York University and a Bachelors degree in Computer Engineering from Tufts University.
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Genet ZinabouSenior Economist, Canada
Genet is a Senior Economist on the Canadian Macro Consulting team. She supports the maintenance and development of the Canadian Provincial-Territorial Model (CPTM) and contributes to consulting engagements with public and private sector clients using economic scenario and risk analysis, forecasting and statistical analysis.
Prior to joining Oxford Economics, she conducted economic research at the International Monetary Fund and collaborated with various Ministries of Finance, central banks, and think tanks on economic policy design. She holds a PhD in Economics from the University of Toronto.
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Honwae WongLead Economist, Cities & Regions
Honwae is a Lead Economist in the Cities and Regions team, responsible for model development, US subnational forecasting and scenarios service, and bespoke modelling on consultancy projects. Prior to joining Oxford Economics Honwae spent four years at Experian on the economic modelling team, where his work included economic impact modelling, producing UK sub-regional forecasts, and bespoke forecasting. He also worked at the Department for Transport in the team responsible for the department’s transport model.
Honwae has a BSc in Economics from Royal Holloway, University of London, and an MSc in Economics from the University of Warwick.
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