What does the Canada-US trade relationship look like?

The Canada-United States trade relationship is the largest bilateral trade relationship in the world by some measures, with two-way trade in goods and services exceeding US$960 billion in 2023. Canada is the United States' largest export market, taking about 17 per cent of all U.S. exports, and the United States takes about 75 per cent of Canadian merchandise exports. The relationship has been governed since July 1, 2020 by the Canada-United States-Mexico Agreement (CUSMA), which replaced NAFTA.

The integration of the two economies extends across automotive, energy, agriculture, services, and finance. Canadian automotive plants ship parts and vehicles back and forth across the border multiple times during a single vehicle's assembly. Pipelines carry Canadian crude oil and natural gas to U.S. Gulf Coast refineries and Midwestern utilities. About 50 per cent of imported U.S. oil comes from Canada. Canadian banks operate substantial U.S. subsidiaries (TD Bank, BMO Harris, RBC City National), and U.S. retailers (Walmart, Costco, Amazon) anchor Canadian retail.

Beyond trade, the two countries cooperate on defence through NORAD (the North American Aerospace Defense Command, established 1957) and NATO, on border management through the Smart Borders Action Plan (2001) and the Beyond the Border Action Plan (2011), and on shared waters through the International Joint Commission (1909) and the Great Lakes Water Quality Agreement (1972, updated 2012). About 400,000 people cross the Canada-United States border every day in normal years.

The relationship faces periodic friction. Softwood lumber duties have recurred in five rounds of disputes since 1982, with current U.S. anti-dumping and countervailing duties of about 20 per cent on most Canadian softwood lumber exports. The Trump administration's 2018 steel and aluminum tariffs prompted Canadian retaliatory tariffs before being lifted. Buy America provisions in U.S. infrastructure spending, the cancellation of the Keystone XL pipeline in January 2021, and CUSMA dairy access disputes have all required active diplomatic management. The Canadian embassy in Washington and the consulates general in Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Los Angeles, Miami, Minneapolis, New York, San Francisco, and Seattle keep the relationship running.