President-elect Donald Trump has justified his threat of 25% tariffs on Canada by pointing to the US trade deficit. Top Canadian economists have a response to that: it’s all because your country wants cheap oil. The US is on track to end 2024 with the largest overall trade deficit in its history. Its imbalance with Canada is about $60 billion. …Trump has repeatedly claimed the deficit is a subsidy to the Canadian economy, and said Tuesday the US doesn’t need anything from Canada. Import and export data, however, paint a different picture. Among the US’s top partners, its trade with Canada is the most equally balanced — because Canada buys $85 million from the US for every $100 million it exports. When stripping out oil and gas, the US actually has a significant trade surplus with Canada — its biggest energy supplier and a key buyer of American products from food to machinery.

“The Americans have had the better side of the deal because for more than a decade, they’ve been running surpluses on the non-energy side,” Stéfane Marion at National Bank of Canada, said. “Your deficit is with Canada on energy, but Canada allows you to have access to energy at a discount that you refine or transform to sell at a higher price to the rest of the world.” The US has been a net total energy exporter since 2019 as increases in domestic production lowered the need for imports. Still, it imports crude oil, petroleum products, natural gas and electricity from Canada. …“For the first time, the US is actually a net beneficiary when energy prices increase because they’re a net exporter,” Marion said. “Americans need to know the reason you have that is partly because of Canada.”