Canadian Prime Minister Mark Carney recently met with US President Donald Trump in Washington, DC, following his victory in last week’s elections. Real foreign policy Carney’s campaign promised to upend Trump’s America First agenda. This position illustrates the changing realities of trade relations from Washington to Beijing.
Underlying that meeting was the reality of trade between Canada and the US, which is in freefall by some measures. The most recent figures indicate that Canada’s exports to the US fell 6.6 percent. Conversely, shipments into Canada from the US declined 2.9 percent. As a consequence of the rebound, Canada’s trade surplus with the United States has plunged. It has increased to 6.1 billion Canadian dollars, or about US$8.4 billion.
When trade tensions escalated south of the border, the US moved to slap across-the-board tariffs on Canadian products starting March 1. These tariffs, which are still in effect today, specifically focus on cars, aluminum, steel, and potash, posing serious challenges to Canadian exporters.
That would mean in March, Canada more than doubled its overall trade deficit. It plummeted from 1 billion Canadian dollars (US$1.4 billion) in February down to only 367 million Canadian dollars (US$506 million). The real story exports, total exports decreased by 0.2 percent in that same period, driven mostly by price declines. On the other hand, imports saw a larger drop than exports at 1.5 percent.
Though faced with these significant challenges, Canada has developed opportunities in emerging markets. Gold exports to the United Kingdom boomed. Crude oil shipments to the Netherlands increased as did a wide range of items shipped to Germany. Unfortunately, exports of pharmaceuticals and uranium to the US decreased during this time period. In another change, steel exports declined and aluminum exports increased for the fourth straight month.
Carney emphasized the importance of collaboration between Canada and the US during his meeting with Trump, stating, “Canada and the United States are strongest when we work together – and that work starts now.”
To be frank, experts aren’t expecting this difficult environment to get easier for Canadian trade anytime soon. Marc Ercolao warned, “brace for increasing headwinds to trade as the worst of the trade conflict is expected to take place over the coming quarters.” This statement further expresses increasing alarm about the potential longterm effects that current and future tariff wars will have on Canada’s economic future.
