Is Trump right about the trade deficit with Canada?

Donald Trump claims the United States has been subsidizing Canada to the tune of hundreds of billions of dollars every year. This has become a big reason for his targeted attacks on trade with Canada. But are Trump’s claims true?

According to CBC News, Trump’s argument hinges on the large trade deficit between Canada and the United States. But as with all things in Trump’s policy orbit, the trade deficit with Canada is more complicated than it seems. 

In December 2024, Trump said the United States was subsidizing America’s northern neighbor by the large figure of $100 billion dollars a year. That number jumped to $200 billion in late January at the World Economic Forum. 

Despite Trump’s claims that the United States is subsidizing Canada, a trade deficit is not the same as a subsidy. CBC News reported that experts have stated while the US does have a trade surplus with Canada, it's very complicated situation. 

For example, TD economists Marc Ercolao and Andrew Foran noted in a January 21st report that “rather than a subsidy, the U.S. trade deficit is a by-product of U.S. economic outperformance relative to other countries.”

Canada exports more goods to the United States than it imports, but this relationship works out well for the American economy and should not be seen as a subsidy, CBC News explained. Yet that isn’t how Trump has been operating. 

"I think that in Trump's mind, he sees trade as a zero-sum game," Concordia University economics professor Moshe Lander told CBC News. "He's just hearing the word deficit. And that's the end of his math calculation."

So how bad is the US trade deficit with Canada? Based on the numbers, the US traded an estimated $762.1 billion in goods with Canada in 2024 according to the Office of the United States Trade Representative. 

The US imported $412.7 billion dollars in goods from Canada while Canada imported a total of $349.4 billion in goods from the United States, putting the American trade deficit with Canada at just $63.3 billion in 2024. 

However, in Ercolao and Foran’s analysis, they noted that Canadian energy imports accounted for nearly all of the US trade deficit with Canada. When energy imports are removed, the situation drastically changes. 

“Remove Canadian energy exports from the equation and the trade story flips,” Ercolao and Foran explained. “Ex-energy, the U.S. enjoys a trade surplus with Canada of around C$60 (US$45 billion).”

Ercolao and Foran also noted that the numbers Trump and his team are quoting are “4 to 5 times the official reported statistics.” However, trade is very complicated, though it does appear the US hasn't been taken advantage of by Canada in the way Trump likes to claim. 

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