Canada would suffer more than the US in a trade war.

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The United States currently enjoys a significant trade surplus with Canada, amounting to $63 billion, excluding energy. This surplus highlights the economic interdependence between the two nations, with the US benefiting more from the trade relationship. In other words, Canada relies on the US far more than the US relies on Canada.

Canada represents only 13% of the US’s international trade volume, while the US accounts for a staggering 77% of Canada’s trade. This imbalance suggests that Canada would face severe economic consequences without access to the US market. The US, on the other hand, has more flexibility to produce or import goods from other sources.

Oil is a global commodity, and the US can easily produce or import more if needed. In contrast, Canada’s ability to export oil is hampered by its government’s restrictive policies on building ports. As a result, 90% of Canada’s oil exports go to the US. Without this market, Canada would struggle to find alternative buyers, potentially leading to economic hardship within a week or two.

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Canada also faces challenges in other sectors. The country has limited production of vegetables, fruits, and nuts, relying heavily on imports to meet domestic demand. Additionally, Canada lacks significant native automotive or tech companies, further limiting its economic resilience.

Canada has shifted its focus away from technological advancements. This change is particularly noticeable in Toronto, where demographic changes have sparked discussions about the city’s priorities.

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In the event of a trade war, Canada is likely to suffer more than the US. The suggestion to impose tariffs on electric cars, for example, would have minimal impact on the US, as the number of electric cars sold to Canada is relatively low.


Sources:
https://www.thebalancemoney.com/trade-deficit-by-country-3306264https://www.cnbc.com/2025/01/31/us-canada-trade-imbalance.htmlhttps://www.reuters.com/markets/us-economy/2025/01/31/us-canada-trade-relations/https://www.wsj.com/articles/us-canada-trade-2025-outlook-11644770741


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