Canada appears to benefit more from trade with the U.S. because its economy is far more dependent on it, with exports to the U.S. comprising a significant portion of its GDP and supporting a large number of jobs. While the U.S. runs a trade surplus in services with Canada, the U.S. economy is less dependent on Canadian trade overall, though it benefits significantly from Canadian energy exports and tightly integrated supply chains.
How Canada benefits
- Economic reliance: The U.S. is Canada's dominant trading partner. Canada-U.S. trade accounts for roughly 75% of Canada's merchandise exports and about 23% of its GDP, making the Canadian economy highly integrated with and dependent on the U.S. market.
- Job creation: Access to the U.S. market is crucial for Canada's economy, with roughly 1 in 6 Canadian jobs linked to exports to the U.S..
- Energy security: Canada is a primary supplier of energy to the U.S. and runs a large energy trade surplus with the U.S..
- Integrated supply chains: Trade is vital for many Canadian industries, particularly in manufacturing and automotive sectors, where supply chains are deeply intertwined with those in the U.S..
How the U.S. benefits
- Energy supply: The U.S. relies on Canada as a principal source for its energy imports, including crude oil, natural gas, and clean electricity.
- Services surplus: The U.S. maintains a significant services trade surplus with Canada, largely driven by tourism and other services.
- Integrated supply chains: U.S. industries also benefit from integrated supply chains, receiving components and machinery from Canada.
- Less economic dependence: The U.S. economy is less reliant on Canada in relative terms, as Canadian trade constitutes a much smaller percentage of U.S. GDP compared to the importance of U.S. trade for Canada's GDP.
Conclusion
- Canada is more dependent on the trade relationship, making it a significant benefit for the Canadian economy, jobs, and energy security.
- The U.S. benefits significantly from the trade relationship, particularly from Canadian energy exports, but is less dependent on Canada for its overall economic output
