A new report by economist Jim Stanford reveals that both the U.S. and Canada benefit significantly from their bilateral trade relationship. Stanford argues that Canada serves as the largest market for U.S. exports and highlights the significant surplus the U.S. enjoys in service exports to Canada. He emphasizes that Canadian purchases of U.S. debt contribute to the U.S. ability to finance its trade deficits.
The U.S. and Canada both reap significant benefits from their current bilateral trade relationship, according to a new report by economist Jim Stanford. Stanford argues that Canada serves as the largest market for U.S. exports, and the U.S. enjoys a substantial surplus in service exports to Canada . He further points out that Canada 's exports of raw materials and energy are crucial inputs for U.S. manufacturing, while Canadian purchases of U.S. debt contribute to the U.S.
ability to finance its trade deficits.Stanford urges Canadian trade officials to emphasize the broader trade balance as they resist the potential 25% tariff on Canadian goods that incoming U.S. president-elect Donald Trump has proposed. He stresses the importance of mutual understanding regarding the detrimental effects a trade war would have on both countries, emphasizing that while both sides would experience economic pain, Canada's smaller economy would be disproportionately affected, posing an 'existential threat.'Stanford acknowledges the difficulty of relying solely on economic logic to deter Trump from imposing tariffs, particularly given the disparity in economic size. He highlights, however, that a closer examination of the trade figures would reveal that the deficit is far smaller than Trump's stated US$200 billion figure. When goods and services are factored together, the U.S. trade deficit with Canada was US$40.6 billion in 2023, according to the U.S. Bureau of Economic Analysis. Furthermore, Stanford argues that Canada's exports to the U.S. are heavily concentrated in energy and 'unfinished products,' which serve as inputs for U.S. manufacturing, benefiting both economies. He concludes that the overall trade relationship presents a picture of mutual benefit, rather than an imbalance where Canada unfairly advantages from a surplus
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