Does the United States have a trade deficit with Canada? According to President Donald Trump, we do. Tweeting in March, after a meeting with Prime Minister Justin Trudeau of Canada, Trump stated, “We do have a trade deficit with Canada, as we do with almost all countries (some of them massive). P.M. Justin Trudeau of a Canada, a very good guy, doesn’t like saying that Canada has a surplus vs. the U.S. (negotiating), but they do … they almost all do … and that’s how I know!”
This tweet came after a news story by the Washington Post that reported, while during a closed-door fundraising dinner in Missouri, Trump recounted his meeting with Trudeau where he insisted Canada had a trade surplus with the U.S., even though, at the time, he had “no idea” whether it was true. Trump said Mr. Trudeau was a “nice guy, good looking,” but still pushed back when, according to the President, Trudeau said, “No, no, we have no trade deficit with the U.S., we have none; Donald, please.”
Trudeau was correct and Trump was incorrect, according to Canadian Consul General Paul Connors, who agreed with his prime minister.
“Yes, the United States has a trade surplus … not a deficit,” Connors said. “The total U.S.-Canada trade in goods and services in 2017 was $680 billion. Of that, the U.S. trade surplus in goods and services with Canada that year was $2.8 billion. The U.S. exports of goods and service to Canada were $341.7 billion, and the U.S. imports of goods and services from Canada were $338.9 billion, according to the U.S. Bureau of Economic Analysis.”
Connors went on to say the United States and Canada share a $1 trillion trade and investment relationship, and the average daily trade is almost $2 billion.
“As its biggest customer, Canada buys more goods and services from the U.S. than China, Japan, Mexico, or the United Kingdom,” he said.
Connors cited a report by Minnesota’s Department of Employment and Economic Development that showed Canada was the state’s largest national export market in 2017, accounting for $4.3 billion in sales (up 5 percent). In addition:
• Overall Minnesota exports to Canada and Mexico rose 5 percent to $6.7 billion
• Ores/slag/ash, exports of which increased by 175 percent in 2017 over 2016, and machinery exports drove growth in exports to Canada
• Exports of ores, slag, and ash to Canada increased by 212 percent in 2017
These statistics – between the United States and Canada, as well as Minnesota and its northern neighbor – in a way illustrate that these deficit and surplus numbers are meaningless when compared to the bigger picture of a robust, mutually beneficial trade relationship between the United States and Canada.
Still, the recent trade remarks by the president come on the heels of other rhetoric from him on possible renegotiating the North American Free Trade Agreement, or NAFTA, which has some on both sides of the border concerned, despite Canada (and Mexico) being currently exempted from recently imposed steel and aluminum tariffs. Connors said he appreciates that the tough issues still remain to be solved in the current NAFTA renegotiations, but good progress is being made, which is generating momentum.
“It makes perfect sense that we – Canada, Mexico and the United States – established the North American Free Trade Agreement in the 90s. Since its implementation in 1994, the GDP of the three North American countries has collectively doubled while trade between the three of us has tripled and agricultural trade has quadrupled.”