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BMO Warns: CUSMA Tariff Scenarios Threaten Canada's Economy

10/11/2025

42 9 Full Breakdown

Summary

Story summary

The Bank of Montreal (BMO) report on upcoming CUSMA negotiations outlines three Canada scenarios: muddle through with minimal growth, a middle scenario with 15% tariffs causing significant slowdown, and a worst-case 35% tariff wall risking recession.
Even in the best case, Canada faces serious harm, while the United States experiences minimal effects.
The Bank of Canada has cut interest rates to support the economy.

History

Historical Context

The Canada-U.S. Free Trade Agreement (CUSFTA), signed on January 2, 1988, aimed to eliminate trade barriers and significantly increased bilateral trade, which rose by 80% by 2008. This agreement laid the foundation for the North American Free Trade Agreement (NAFTA) in 1994. Current negotiations for the United States-Mexico-Canada Agreement (CUSMA) face potential tariffs, highlighting ongoing economic vulnerabilities for Canada.

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Story summary

The Bank of Montreal (BMO) report on upcoming CUSMA negotiations outlines three Canada scenarios: muddle through with minimal growth, a middle scenario with 15% tariffs causing significant slowdown, and a worst-case 35% tariff wall risking recession.
Even in the best case, Canada faces serious harm, while the United States experiences minimal effects.
The Bank of Canada has cut interest rates to support the economy.

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