The commercial relationship between the United States and Canada is more complicated than most of them may think. At first glance, numbers can draw the story of imbalance, especially when looking only for the commercial deficit of goods between the two countries. But if we dig deeper, given the four main columns that define this commercial partnership, it becomes clear that the United States is developing more positively than many people realize.
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Changing scene
As of today, the commercial climate between the two countries is more tense than it was eight months ago. However, Canada recently dropped a mutual tariff for American goods, eliminating tensions that were highly weighing on companies on both sides of the border. Nearly 85 % of the products flow now under the United States-Canada’s Free Trade Agreement, making trade smoother and less opponents than in previous years.
But the largest image exceeds the customs tariffs or short -term political transformations. To really understand the commercial relationship of the United States and Canada, we need to examine it through four main pillars that draw a much broader picture of the relationship between the two countries.
Pillar 1: merchandise trade
In 2024, the United States recorded a $ 63.3 billion trade deficit with Canada in goods; However, this number is misleading when displayed in isolation.
A large part of this deficit comes from the US oil and gas imports, and the raw materials that are refined in Houston and reselling them to Canada at three times the price as a fuel. Make the power component, and the United States actually runs a surplus in the merchandise trade with Canada.
In other words, what appears to be a unilateral loss of the United States is actually a strategic necessity, nourishing the American economy and creating opportunities for profit in the direction of the river.
Pillar 2: Services Trading
Behind the physical goods, the service economy tells a different story, as the United States has a clear advantage.
In 2023, the United States recorded a $ 31.7 billion trade surplus with Canada. This includes everything from consulting contracts to digital subscriptions such as Netflix and Microsoft and other platforms that Canadians buy in large numbers.
While the goods deficit attracts attention, the surplus of services compensates it greatly. When goods and services are combined, the total deficit shrinks by half, leading us to the third column.
Pillar 3: Foreign Investment (FDI)
Foreign direct investment may be the most overlooked column. Canadians are invested extensively in American real estate, companies and markets, much more than Americans invest in the north of the border.
- Canadian foreign direct investment in the United States (2022): $ 683 billion
- The United States of America, foreign direct investment in Canada (2022): $ 438 billion
This is a $ 245 billion gap in favor of the United States, as Canadian investors transfer more money to American homes, stocks and companies. For every American who buys a hut in Ontario, there are countless Canadians who buy homes in Florida, Arizona or California and spend money in American companies such as Home Depot. This imbalance in direct foreign investment sets the United States at the forefront of more than 200 billion dollars.
Pillar 4: The US -owned companies in Canada
The final pillar is less measurable, but of the same importance: the presence of companies owned by the United States operating in Canada.
Home names such as McDonald’s, Fedex, Best Buy, Marriott, Home Depot and Lowe are American companies that make profits on Canadian soil. These profits are returned to American parent companies, which increases the strengthening of the American economy by Canadian consumers.
Although it is not officially measured in commercial statistics, this continuous flow of profits is another way that the United States quietly benefits from the commercial relationship.
When all four columns are considered, the narration turns greatly. The commercial deficit of the goods often is just one piece of a much larger puzzle. Services trade, foreign direct investment, and US -owned companies all tend to be greatly for the benefit of the United States.
We look forward
While we move towards 2026, some uncertainty about the definitions and protection of the sector remains. While all discussions of customs tariffs are unlikely, the general trend indicates more stability and mutual recognition of the deep interdependence between the two economies.
For both companies and policymakers, the main fast food is: do not be myopia. The relationship between the United States and Canada is more than just a single commercial deficit. It is a multi -faceted partnership, deep and useful.
