The statement of the president of the United States, Donald Trump, that Your subsidy country Canada with hundreds of billions of dollars each year has become a key table in its argument to attach the country. But are your numbers add?
Its argument depends on the belief that the deficit in trade between the two countries has left the United States standing on the bill for the economic growth of Canada.
The amount of “subsidy”, which Trump states that the United States provides that Canada has varied over time. In December, he said They married $ 100 billion in the United States. And said it was $ 200 billion as recently as Thursday.
“We can’t do that more,” He told an audience in the World Economic Forum Last month, when he put the deficit at $ 250 billion. “You can always become a state, and if you are a state, we will not have a deficit. We will not have to rate.”
Experts say that while the United States has a commercial deficit with Canada, that is, we export more to them than export to the United States, that relationship serves the economy of the United States well and should not be seen as a subsidy.
“I think in Trump’s mind, he sees trade as a zero sum game,” said CBC News, professor of economics, professor of economy at the University of Concordia. “He is just listening to the word deficit. And that is the end of his mathematical calculation.”
Is it really a subsidy?
Lander says that if Canada hypothetically “sold its oil for $ 100 but the United States paid $ 125, that would be a subsidy.”
This price difference would be recorded as a gift in the Canada Financial Transactions Registry “without any product and service provided in exchange”, which Lander says that it is not.
The economist of the University of Toronto, Joseph Steinberg, explains that when a country has a commercial deficit, it has more capital that flows, which can strengthen its economy.
“The United States commercial deficit of the United States is not a function of commercial policy,” Steinberg said. “It is mainly a function of [a] Relatively low desire to save within the United States, but perhaps most importantly, a relatively strong desire worldwide to invest in the United States. “
He said that the United States is the main destination for foreign direct investment, which is a net benefit for that country.
“The general principle is that a commercial imbalance is not a form of subsidy,” he said.
Why does the president of the United States, Donald Trump, imposed 25 percent tariffs on all imports of steel and aluminum? Then, Andrew Chang breaks down Trump’s claims that the United States is largely subsidizing Canada.
Steinberg says that the United States imports more aluminum in Canada than the imports of Canada in the United States because grinding aluminum is cheaper here, largely due to the abundance of economic electricity to the north of the border, particularly in Quebec
“It is better for us to produce it because we are better in that,” Steinberg said. “And it’s also great for them, because they consume it cheaper than they would.”
He says that allows US manufacturers. Focusing the cheapest aluminum in Canada on products that the country consumes or exports at a lower price than if it had to make aluminum itself.
How big is the commercial deficit?
According To the United States Census OfficeThe commercial relationship between Canada and the USA.
In 2024, US exports to their main shopping partners of trees were worth approximately $ 349.4 billion of the United States (Canada), $ 334 billion of the USA. (Mexico) and $ 143.5 billion of the US. (Porcelain).
While Canada is its largest export market, we only take third place when it comes to imports, after Mexico and China.
That gap between imports and exports left the US with an American commercial deficit of $ 63 billion with Canada last year, below a little more than $ 64 billion of the United States in 2023. That is much less than the supposed $ 200 billion of Trump.
That number may seem tall, but it is just over five percent of the United States global commercial deficit with all countries, which was $ 1.2 billion from the United States last year.
Lander says that when the United States commercial deficit is measured with annual United States GDP of almost $ 30 billion of the USA, the commercial deficit with Canada is just more than a rounding error.
He says that a way in which the United States could eliminate its commercial deficit would be to stop operating internationally. But that, Lander said, is not even something that the isolated nation of North Korea does.
“Self -sufficiency is an attractive concept, but no one is self -sufficient unless they are cultivating all their own food, producing their own clothes, manufacturing their own cars, etc.,” he said.
A matter of energy
According Canada StatisticsEnergy exports such as oil, natural gas and electricity constitute approximately one third of the goods that Canada sent to the south last year.
Eliminate energy, and it is Canada who has the commercial deficit.
“The size of that deficit is largely a function of oil prices. Petroleum prices fall, that deficit is reduced a ton. Petroleum prices rise, grows,” Steinberg said.
And he says that it is of economic interest of the United States to maintain those imports.
“The reality is that the energy we are selling to the United States is cheaper than the energy they can buy in virtually any other place in the world,” he said.
In the 1980s and 90s, there were generalized fears that oil was running out and US production was falling. In response, the United States refining industry redesigned its facilities to process a heavy crude from Latin America and Canada.
With US refineries still configured to process a heavy crude, the country exports the lighter schist oil that now extracts refineries abroad from Texas.
Canada supplies the United States about four million barrels per day.
The United States could recondition its refineries to process the slight sweet crude oil that it obtains from fracking in Texas, but the supply is not expected to last enough to deserve the investment. And in addition to political complications when importing a heavy crude from countries such as Russia and Iraq, Steinberg said they would involve “massive” transport costs.
