Low Likelihood, Significant Expense: The Macroeconomic Impact of Withdrawing from CUSMA

The Uncertain Road Ahead for CUSMA

The fate of CUSMA stands as the most significant source of economic uncertainty for Canada this year. As the agreement undergoes its scheduled review, three possible outcomes could emerge:

• Extension: All three member nations agree to prolong the agreement for an additional 16 years.
• No Extension: The agreement continues in effect, but only until its planned expiration in 2036, with yearly reviews required.
• Withdrawal: Any participating country may choose to exit the agreement by providing six months’ notice, as outlined in Article 34.6. However, this route is fraught with complex legal challenges and considerable political ramifications, particularly for the United States.