Canada is the largest export market for the U.S. and makes up one of the smallest trade deficits, owing largely to U.S. demand for energy-related products. Trade in the auto sector is balanced between the 2 nations. While President Trump has mused that the U.S. could replace Canadian auto exports with its own domestic supply, the highly integrated North American supply chains is a major complicating factor. …With respect to Trump’s assertion that the U.S. subsidizes Canada to the tune of US$200 billion per year, it’s unclear where this number is derived. In any event, rather than a subsidy, the U.S. trade deficit is a by-product of U.S. economic outperformance relative to other countries. As Canadian’s brace for a long period of “deal making” under President Trump’s tariff strategy, here’s a primer on what’s at stake and the facts behind the rhetoric.
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