Canada’s trade relationship with the United States
Canada and the United States have one of the largest and most comprehensive trading relationships in the world – a relationship that supports millions of jobs on both sides of the border and observes nearly $3.6 billion in goods and services crossing each day. Moreover, the U.S. is the largest investor in Canada, and Canada is the largest source of foreign direct investment in the United States. In 2023, Canada exported $595 billion in goods and services to the United States – 78 per cent of our net exports.
The economic impact of Canada and Alberta’s trading relationship with the United States is similarly profound. In 2023, Alberta alone exported $156.1 billion to the United States – over 90 per cent of our net exports by value. Whether energy, agriculture, mining, consumer goods, forestry or any sector exporting goods or services, a thriving trade relationship with the United States is vital to Canada’s competitive advantage.
And Albertans know this relationship matters, particularly ahead of the upcoming U.S. election. Recent polling from Janet Brown Opinion Research, commissioned by the Calgary Chamber of Commerce, found that 72 per cent of Albertans are following the U.S. election closely, and 83 per cent expect the election to impact Alberta’s economy. This is significant and shows Albertans are aware of the serious impact the Canada-U.S. relationship has on our economy.
Given the considerable economic value of the Canada-U.S. trade relationship, a comprehensive understanding of policy decisions and directions south of the border is critical to the short- and long-term prosperity and economic security of our country. As we analyze the policy environment in the United States, Canadian governments must work proactively to advance policies and investments that foster collaborative, stable and beneficial trade relationships – regardless of who holds power in Washington. Over the next few weeks, the Calgary Chamber will release a series of articles discussing the importance of the U.S. policy landscape on the Canadian economy, including:
- 2024 U.S. Election: Impact on the Calgary Business Community, analyzing the value of the Canada-U.S. trade relationship and providing insights of both Trump and Harris’ potential direction on foreign trade.
- 2024 U.S. Election: Republican & Democrat Economic Policy, diving into specific platforms for each major party in the U.S. and providing an analysis of their impacts on the Canadian economy.
- 2024 U.S. Election: Recommendations to Canadian Governments, providing actionable recommendations for Canadian governments to work effectively with either successful candidate in the U.S. election.
Trade significance with the U.S.
Canada’s trade relationship with the U.S. is critically important in particular for energy, agriculture and small business sectors.
Energy
Canada remains the single largest foreign supplier of energy to the United States, providing an average of more than 4.6 million BOE (barrel of oil equivalent) per day in total petroleum products to the U.S. in 2024 – more than 52 per cent per cent of the U.S. import supply. Through 2022, Canada exported more than $216 billion worth of energy products to the United States – 90 per cent of energy exports. The ability to successfully export our energy products to the United States is crucial to the health and growth of the Canadian energy sector. Across Canada, the energy sector contributed nearly 700,000 jobs (direct and indirect) and 12 per cent of our GDP. In Calgary, the top five businesses by revenue in 2023 were energy companies – all of which either export to the United States, have operations there, or both.
In a time of increasing concern over energy security and given the economic value of Canada’s relationship with the United States, it is important that businesses and governments on both sides of the border understand how the upcoming federal election in the United States could impact our energy trade relationship. Moreover, ensuring strong relationships is essential for both the Canadian and U.S. economy, any decline in our energy exports from Canada would have direct consequences for jobs in the Canada energy sector and would ultimately represent a decline in GDP contribution.
Agriculture
The continued growth and success of Canada’s agriculture sector relies on our ability to export agriculture and food products, and access to a massive market such as the U.S. is key to our export advantage. Currently, the agriculture sector contributes 7 per cent of our GDP and provides roughly 1 in 9 jobs in Canada. Given the volume of product moving to the U.S. each year, maintaining growth in our agriculture trading relationship with the U.S. is fundamental to the success of the agriculture industry in Canada. Through 2023, Canada exported upwards of $99 billion worth of agriculture and food products globally, and the United States represented 60 per cent of exports by value. Moreover, our agricultural trade relationship with the U.S. has been growing at an average annual rate of nearly 8 per cent since 1989, the year that NAFTA was signed. Free and advantageous trade to the U.S. is necessary for the continued growth of our agriculture industry and a decline in this relationship would represent a decline in an industry that currently employes 2.3 million people across Canada.
Small business
Small and medium enterprises (SMEs) are the backbone of our economy, and a key contributor to their success is our trading relationship with the United States. In 2022, SMEs contributed 41 per cent of our exports by value across the globe and 42 per cent of our exports to the United States. In the same time period, 99.7 per cent of businesses in Canada were SMEs, and they employed 64 per cent of the private labour workforce. Small businesses in Canada choose to expand to the United States for many reasons: ease of logistics, similar market interests, a comprehensive free-trade agreement, and – perhaps most importantly – a significantly larger pool of consumers to access when compared to the Canadian market. This explains why across Canada, 79 per cent of the revenue from exports for small businesses came from exports to the United States. U.S. market access for Canadian SMEs is a significant advantage that allows them to grow and scale with a larger pool of capital and customers in our southern neighbours. For our SMEs to succeed, it is essential that our favourable trade relationship with the U.S. is maintained. If our trading relationship with the U.S. were to decline, it would limit the ability of SMEs to grow and scale with the massive pool of consumers currently available in the United States. SMEs employee 10.7 million people across Canada, if SMEs are limited in their capability to grow in the U.S. market it puts jobs and GDP at risk.
