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The trade relationship of theUnited States withCanada is the largest in the world.
In 2023, the goods and services trade between the two countries totaledUS$916 billion with U.S. exports valued atUS$440 billion and Canadian exports atUS$476 billion, resulting in a United StatesUS$36 billion trade deficit with Canada.[1] Canada has historically held a trade deficit with the United States in every year since 1985 in net trade of goods, excluding services.[2] The trade relationship between the two countries crosses all industries, and both nations are one of the largest trading partners of the other.
The trade acrossAmbassador Bridge, betweenWindsor, Ontario andDetroit, Michigan, alone is equal to all trade between the United States andJapan.[3][4]
Canadian politicians have debatedfree trade since 1866.[5] Trade with the United States was the main topic in the 1911Canadian Federal Election, where it was proposed by the Liberal Party of Canada and opposed by the Conservative Party, as well as in the 1984 and 1988Canadian Federal Election, where the Progressive Conservative Party promoted a free trade agreement, opposed by the Liberal Party.[citation needed] Although there were many bilateral agreements reducing tariffs, a free trade agreement was not reached until theCanada–United States Free Trade Agreement in 1987.[6]
TheCanada–United States Free Trade Agreement laid the groundwork for a multilateral and multicultural agreement between theUnited States,Mexico, andCanada. On January 1, 1994, theNorth American Free Trade Agreement (NAFTA) came into effect. The agreement has helped to increase trade amongst all three member countries. Although there is some dysfunction between the countries, especially in the area ofautomobiles andagriculture, the trends are negligible as the agreement has arguably been a boon for all nations involved.[4]
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There are several disputes arising from the bilateral trade between the two nations. The United States placed Canada on itsSpecial 301 Reportintellectual property rights enforcement (although under the mildest category of "rebuke"). Other products from Canada under dispute includesoftwood lumber, beef, tomatoes, and other agricultural products.
The heightened border security as a result of the 2001terrorist attacks has been an issue of concern for businesses in both countries. The issue has become less of a concern since the attacks with the development of new technology, registration, training, and fewer rules. However, a midpoint estimate of US$10.5 billion costs to businesses in delays and uncertain travel time have affected trade.[7]
One ongoing and complex trade issue involves the importation of cheaperprescription drugs from Canada to the United States. Due to the Canadian government'sprice controls as part of theirSingle-payer medical system, prices for prescription drugs can be a fraction of the price paid by consumers in the unregulated U.S. market. While laws in the United States have been passed at the national level against such sales, specific state and local governments have passed their own legislation to allow the trade to continue.[citation needed]
The Canada–United Statessoftwood lumber dispute is one of the most significant and enduring trade disputes in modern history. The dispute has had its biggest effect onBritish Columbia, the major Canadian exporter of softwood lumber to the United States.
The heart of the dispute is the claim that the Canadianlumber industry is unfairlysubsidized by the federal and provincial governments. Specifically, most timber in Canada is owned by provincial governments. The price charged to harvest the timber (the "stumpage fee") is set administratively rather than through a competitive auction, as is often the practice in the United States. The United States claims that the provision of government timber at below market prices constitutes an unfair subsidy. Under U.S. trade remedy laws, foreign goods benefiting from subsidies can be subject to acountervailing duty tariff to offset the subsidy and bring the price of the product back up to market rates.
During theSecond inauguration of Donald Trump, President Trump threatened Canada and Mexico with 25% tariffs across multiple industries.
Due toTrump's tariff threats, Ontario PremierDoug Ford proposed halting US liquor imports. Ford also warned that energy exports to the US will be cut if Trump imposes tariffs. In addition to potentially cutting power to Michigan, New York state, and Minnesota, the Ford government sought to restrict exports of critical Canadian minerals needed for electric vehicle batteries and the supply chain.[8][9]
On 1 February 2025, President Trump declared a national security emergency under the terms of theInternational Emergency Economic Powers Act and enacted 25% tariffs on all goods imported from Canada into the United States, excluding energy imports which became subject to a 10% tariff, and suspended thede minimis rule while the emergency is in place. Canada responded by initiating retaliatory 25% tariffs on select goods imported into Canada from the United States.[10] According to the Canadian Chamber of Commerce,Saint John, New Brunswick, followed byCalgary, will be the most impacted cities in Canada as a result of the Trump tariffs.[11]
On 24 October 2025, U.S. President Donald Trump announced the *termination of all trade negotiations with Canada*, stating that ongoing talks between the two countries would not proceed further.[12] The Canadian government responded by expressing regret and noting that the decision followed a series of tariff escalations in 2025. Analysts observe that although the bulk of goods remain covered under theUnited States–Mexico–Canada Agreement (USMCA) exemptions, the broader suspension of talks signals a significant shift in Canada–U.S. trade relations.[13]
The termination announcement adds to the framework of the wider 2025 trade dispute, which began on 1 February 2025 when the U.S. imposed broad tariffs on Canadian goods and Canada launched retaliatory measures.[14] Observers note that the move raises uncertainty for future bilateral trade policy and bilateral supply-chain integration, especially in sectors such as energy, automotive and agriculture.[15]
Since the September 11th attacks, there has been a debate on whether there should be furtherNorth American integration. Some have proposed the adoption of the Amero under theNorth American Currency Union as the officialcurrency of North America.[citation needed] While these discussions are more prevalent in Canada[citation needed], studies have shown that United States citizens would not object to economic integration. Former U.S.AmbassadorPaul Cellucci stated, however, "Security trumps trade" in the United States, and so as long as Canada is a possible point of entry for terrorists, such integration seems unfeasible.[16]
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The strength of the Canada–U.S. relationship is demonstrated by impressive bilateral trade of approximately $1.9 billion a day, along the world's longest undefended border. Energy trade is the largest component of this cross-border commerce. Canada has the third-largest oil reserves (afterSaudi Arabia andVenezuela), thanks to itsoil-sands resources. The United States has historically been Canada's only foreign market for natural gas, oil, andhydropower. In 2010, almost 100% of Canada's exports in these commodity classes were destined for the United States. Canada is the largest foreign supplier of crude oil (25% of oil imports) and natural gas to the United States. In short, this energy relationship has enhanced U.S. energy security and provided Canada with a steady demand for its energy exports.
However, this highly integrated U.S.–Canada energy relationship may change dramatically in the near future. U.S. oil and natural gas production and reserves are expanding because of growingtight oil andshale gas developments. Furthermore, theU.S. Energy Information Administration (EIA) forecasts slower growth in U.S. oil and natural gas consumption in the coming decades until 2035. Consequently, the United States no longer appears to be an unlimited market for Canadian energy, leaving Canada seeking new export destinations.
Both Canada and the United States are increasingly reliant on foreign investment to develop their resource sectors, with Asia serving as an important source of capital. Initially, Asian investors focused on project investments as minority joint venture partners, but they are now showing a growing interest in owning production companies. The objectives of Asian investors for investing in the North American energy sector include seeking attractive financial returns on investment and viewing North America as an energy supply source for their economies. The expanding energy investment and trade between North America and Asia have the potential to be mutually beneficial.[17]
Another source of tension has been Canada's protection of their dairy farmers. Canada is the only industrialized country in the world to still use a "supply management system" for regulating the supply of dairy products.[18] The US sees the system as protectionist because after an annual import quota has been reached, a large tariff (240% for milk, 300% for butter) is applied to any additional imports.[18] However, many of these rates were negotiated in the USMCA trade agreement, the US has similar "above-quota" tariffs on imports from Canada, and the quotas are rarely - if ever - reached.[19]
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BecauseEnglish is the majority language in both countries, and accents and dialects on both sides of the border are (relatively) similar and is a variety ofNorth American English (as compared to the British or Australian English), both high culture and mass media are easily traded. Both countries have minority-language media—Canada's largefrancophone population and the United States' largehispanophone population—as well as immigrants and indigenous language speakers, but cultural trade mostly concerns English-language media.
The major difference is that the U.S. media market is more than 15 times larger, meaning that the Americans enjoy greatereconomies of scale. Historically, this has always been the case since the 19th century, when Canada was flooded with American books, but the beginning of Canada'scultural protectionism dates to the 1920s, when Canada's radio market was dominated by American broadcasts, leadingcultural nationalists to form theCanadian Radio League, whichlobbied for a publicly funded broadcaster to compete with U.S. stations. In the 1950s, television experienced a similar dispute, with Canadian stations airing U.S. programming and U.S. stations broadcasting into Canada, leading to the creation ofCBC Television. Since the 1970s, Canadian radio and television stations have been required by law to air a minimum percentage ofCanadian content.
One source of tension is a difference in philosophy: the Canadian position is that its culture is a prerequisite for safeguarding its nationhood and should thus be excluded from free trade agreements, whereas American negotiators see media as just another commodity. This difference came to light during the dispute over "split-run" magazines in the 1990s. Split-runs are magazines that produce a slightly modified edition (for example, for the Canadian market) and resell much of the advertising space to Canadian advertisers. Canadian publishers argued that the Americans were poaching all their advertising revenue without producing substantial Canadian content. American publishers and the U.S. government countered that banning "split-runs" was illegal underinternational trade law. There have also been disputes over the generoustax credits that the Canadian federal and provincial governments give to television and film productions. This, combined with a weakerCanadian dollar caused American filmmakers to complain during the 1990s that "runaway productions" were hurting American employment in the film industry, especially in California.
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