This post is designed to educate those of you (in America) who don’t know the reality (because many American news sources are only telling half of the story) as a precursor to tomorrow’s post.
1) The US administration claims to have a 100 Billion trade deficit with Canada! If you do the analysis and dive down into the trade data just one level, you see almost 170 Billion of Canadian exports consists of Energy and Oil.
1a) A significant number of American states DEPEND on Canadian electricity for a portion of their energy needs, including Maine, Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, Washington, Oregon, Nevada, Arizona, and California. Three American states depend on Canadian energy (from Ontario in particular) for a significant portion of their energy needs and would experience brownouts/rolling black outs otherwise: New York, Michigan, and Minnesota. (That’s 14 states! Newsweek summarized the 10 states that are top importers of Canadian energy.) (Without this energy, America would have an Energy Crisis!)
1b) American utilities pay very low commercial rates for Canadian energy. While not always public (as many utilities are privately owned in America), it’s easy to calculate. For example, in 2023, the average cost per kwh (kilowatt hour) paid by a resident of Maine was 21c USD. In Nova Scotia, the average cost per kwh paid by a resident of Nova Scotia, in USD, was 23c! American utilities exist to make a profit. Since these utilities charge Americans LESS than what Canadians pay, it’s pretty obvious their discount is higher than the discounts even Canada’s commercial entities receive.
1bii) American state utilities chose this route to meet their energy needs because it was much more economical for them to buy Canadian energy, that Canada can produce cheaply in bulk with ample hydro that many American states don’t have the option of (and states that would otherwise have to resort to polluting fossil fuels near populated areas OR build nuclear power plants, and no one wants those nuclear power plants near populated areas). This strategy works out better for the average American.
1c) America buys tens of billions of dollars of unprocessed crude oil from Canadian oil sands at rates 10 to 20 basis points below the market rate, which America processes to meet its energy needs, and then resells what it doesn’t use at an annual profit of about 20 Billion a year. In other words, America gets cheaper unprocessed crude from Canada than it does from anyone else and in the world and America (not Canada) profits from it.
2) Taking the energy and oil out, you see it is actually Canada that has a 70 Billion trade deficit with the US when it comes to goods and services. So, if Canada is actually buying more products from the US than the US is buying from Canada, what is Canada actually exporting?
2A) Motor Vehicle Parts. Yes, Canada has some automotive plants in Ontario, but most of the Big Automakers use our plants to make parts (not vehicles) cheaply (because of the dollar conversion, with the Canadian dollar typically being less than 75c for an American), import those into the US, make finished vehicles sold at a high profit margin, with a number of those sold back to Canadians (because they realize they profit twice when they make the cars there, once when they import the parts cheaply and once when they export the cars back to Canada to be sold at a profit). (i.e. Canadians pay more for what Canadians make!)
2B) Agricultural Products. Grains, Oils, Seafood and Alberta Beef are big exports. Canada has three prairie provinces which have little else but wheat and grain fields, a huge amount of coast, and Alberta is well known for its beef. America has 10 times the Canadian population, needs 10 times the food, only has so many mid-west states with so much farmland area, and only a fraction of the Canadian coast. So America needs tho make up its food deficit from somewhere, and the most logical sources are its neighbours, Canada and Mexico, who can supply it more cheaply than anywhere else.
2C) Metals and Minerals. Canada has a land area that roughly equals America’s, and more undeveloped land area that it can more-or-less freely mine in. Plus, Canada’s lower labour costs help America. And oh, because America’s President signed a great deal for Americans in his first term (USMCA), like everything else on this list, America is getting a great price on these metals and minerals that it can manufacture into world leading products (with the best engineers in the world) to sell at high profit margins.
2D) If you start to put this together, Canada is not responsible for any American job losses or manufacturing declines. McKinsey and the other Big X Consulting Firms who started the outsourcing trend to China (and then neighbouring countries) in the 1980s and 1990s are! THEY convinced American corporate executives to take your jobs away, Not Canada! (Canada wanted you to stay strong in manufacturing so we could stay strong in raw material and part production.)
(McKinsey and Big X Consulting firms not only convinced American executives to take your jobs away, but they created the current China crisis. In 1990, China was a mere 1.8% of global GDP. In 2024, China is 19.45% of GDP. Canada didn’t do that, and neither did the majority of America’s trading partners (as none of them come close to the wealth and power of the USA which is the only country that, on its own, typically controls over 25% of Global GDP (despite only being 4% of the global population). [But if you are wondering who else helped make China strong, look at the big green segment of this 2021 GDP Map by Visual Capitalist.] Canada exists to provide America with raw materials and parts and support, and Canada WANTS American sectors to be strong so its sectors can be as well.)
3) The American administration’s claims of 300% to 400% tariffs on dairy are complete and utter falsehoods. While Canada does have tariffs of 298.5% for imports above-maximum butter quota and 245.5% for above-maximum cheddar cheese quota, America is currently NOT hitting its allowed zero-tariff maximum in any category of dairy product (Source: CNN. America is only coming close to the quota (above 80%) in two categories and only halfway there in two more categories. (Source: TheDeepDive). Under USMCA, America’s President negotiated the biggest increases to quota ever!
“During the renegotiation of CUSMA (USMCA), the United States secured substantial tariff-free access to the Canadian dairy market. As a result, the U.S. enjoys a significant dairy trade surplus with Canada, exporting $877.5 million CAD in dairy products while importing $357.9 million CAD in return.” (Source: Dairy Farmers of Canada). You can find them on the Office of the United States Trade Representative Web Site. (Note that the Dairy Farmers of Canada believes this concession amounted to a loss of 18% in domestic production, which, simply put, means Canadian industry shrank 18% and when an industry shrinks 18%, there is usually a corresponding loss in jobs. In other words, Canadians gave up jobs and welfare for American dairy farmers!)
i.e. If you finish putting all of this together, America is making out great off of Canada as a result of USMCA. (When your President said it was the greatest deal ever for the US in his first term, he was right!) From 2019 (it’s signing) through 2024, GDP Growth totalled 13.45% when you added up the growth or contraction (during COVID) for each year, with nominal GDP being 35% higher in 2024 than 2019. In Canada, it was closer to 9.75%, with nominal GDP increasing only 29%. In comparison, from 1993 through 2018, from the signing of NAFTA until its conclusion, nominal GDP in Canada grew 293% compared to the US nominal GDP growth of 300%. This means that while Canadian growth went from being on par with America during NAFTA, it’s since declined to being only 83% or 4/5ths of American growth since USMCA. Think about that!
And while you are thinking, remember that Canada never complained once! (Why? 1. When Canadians make a deal, Canadians keep it. If Canadians make a bad deal, Canadians take responsibility for it and eat it. 2. Canadians want their allies to be strong, even if that means giving up a bit more than they should. Most Canadians realize that a strong America means a strong Canada and our often willing to go the extra mile when asked, especially if they believe, or are led to believe, America needs the help and could hurt otherwise.)
4) While Premier Ford of Ontario might be the exception, Canadians are NOT hostile. Any claims Canada is hostile is just the pot calling the kettle black. Literally all you have to do to get Canadians back at a negotiating table is just ask nicely. [And remember, Canada doesn’t like bullies. As another history lesson, guess which country among Canada and America was the first to defend freedom in World War I, by 32 months, AND World War II, by 25 months? Hint: It wasn’t America!])
Also, Dear Americans, have you taken a close look at that Big, Beautiful Bill your representatives passed? The one that is estimated to add, not subtract, 3.4 Trillion to your national debt? That’s 50% more than the entire GDP of Canada! Canada is nothing more than a rounding error in America’s financial calculations!
