
A lot of people don’t really get the whole trade deficit situation with Canada that Donald Trump keeps bringing up, plus the tariffs he’s slapped on Canadian goods. Honestly, this trade setup is pretty complicated, and we think Trump doesn’t really grasp all the little details.
Canada and the US have one of the closest economic relationships in the world, with billions of dollars worth of goods and services exchanged between the two countries every year. However, there is a common belief that Canada consistently runs a trade deficit with its southern neighbor. But is this true?
First, it’s important to understand what a trade deficit is. A trade deficit occurs when a country imports more goods and services than it exports to other countries. This means that the country is spending more on foreign goods and services than it is earning from exports.
When it comes to Canada’s trade relationship with the US, the numbers can be interpreted in different ways. On one hand, it’s true that Canada imports more goods from the US than it exports. In 2019, for example, Canada imported $314.2 billion worth of goods from the US, while it only exported $266.9 billion worth of goods to the US. This would appear to show a trade deficit of $47.3 billion.
However, when it comes to trade in services, the picture is different. In 2019, Canada exported $61.3 billion worth of services to the US, while it imported $53.5 billion worth of services. This means that Canada had a surplus in trade in services with the US of $7.8 billion.
When you add the trade in goods and services together, the overall picture changes. In 2019, Canada’s total exports to the US were $328.2 billion, while its total imports from the US were $367.7 billion. This would appear to show a trade deficit of $39.5 billion.
But it’s important to note that this trade deficit includes the cost of oil and other energy products that Canada imports from the US. If you exclude these products, Canada’s trade deficit with the US is significantly smaller.
Furthermore, it’s important to consider the broader economic context. Canada and the US are each other’s largest trading partners, and the flow of goods and services between the two countries is highly integrated. Many of the goods that Canada imports from the US are used as inputs in Canadian exports, and vice versa. This means that the trade relationship between the two countries is more complex than simply looking at the value of imports and exports.
In conclusion, while it’s true that Canada imports more goods from the US than it exports, the picture is more nuanced when you consider trade in services and the broader economic context. When you add trade in goods and services together, Canada does have a trade deficit with the US, but it’s smaller than it might first appear. And when you exclude energy products, the trade deficit is even smaller. Ultimately, the trade relationship between Canada and the US is highly integrated and benefits both countries.








