Canada-US Trade: A Billion-Dollar Economic Engine

Though arguably they ought to, the states and Canadian provinces that encircle the Great Lakes are not frequently thought of as having independent economies.

Trade within the region is heavily linked, after all. There is an annual movement of more than 200 million tons of goods, accounting for more than half of all bilateral border trade between the United States and Canada. If it were a distinct country, its $6 trillion GDP would place it third in the world's economies.

AN INVESTMENT POWERHOUSE

This infographic illustrates how the area's many rivers and the local population have a big economic impact and foster trade connections.

Eight states (Minnesota, Wisconsin, Illinois, Indiana, Michigan, New York, Ohio, and Pennsylvania) and two Canadian provinces (Ontario and Quebec) comprise the Great Lakes Region, which encircles the five interconnected freshwater lakes known as the Great Lakes.

CROSS-BORDER CUSTOMERS

Trade in products is the foundation of the unique relationship that exists between the states of the United States and the provinces of Canada in the Great Lakes Region.

The phrase "intermediate goods" refers to supplies of raw materials, parts, and components as well as services that are utilized in the US to produce other goods and services. These imports from Canada make up 78% of all imports for American companies doing business in the area. On the other hand, Canadians also spend billions of dollars on goods from the Great Lake states. This infographic on commerce between the United States and Canada also shows that Canada is the region's biggest foreign consumer in each of the states. BRIDGE THROUGH HARD WATER The Ambassador Bridge, which spans the Great Lakes and connects Detroit, Michigan, and Windsor, Ontario, is a timeless symbol of the two countries' tight economic links, even in the face of recent rhetorical attacks on the U.S.-Canada trading relationship. This 1.3 mi (2.3 km) suspension bridge is used by over 10,000 cars each day, facilitating nearly US$500 million in trade between the two nations. That is equivalent to 25% of all bilateral trade that occurs between the US and Canada. Remarkably, the United States' bilateral commerce with the United Kingdom, South Korea, Germany, France, and this bridge exceeds its total trade with all of those countries put together. A global shift Put differently, there is a big demand for batteries. As countries shift away from fossil fuels and automakers hurry to go electric, the requirement for batteries to power our cars and maintain global electrical grids is likely to expand enormously. Canada joined the global Drive to Zero memorandum of understanding last year, along with fifteen other countries. Under the agreement, the country will aim to achieve 30% and 100% emission-free commercial vehicle sales by 2030 and 2040, respectively.Six

But governments and competitors like Tesla aren't the only ones putting pressure on the company.

The competition

China now has a monopoly on the battery market, producing 80% of the world's cells and most of the world's refining capacity for battery materials.

However, other regions are racing to challenge China's hegemony and establish a more geographically diverse battery supply chain as supply chain security and energy security become significant concerns for many governments.

The competitive advantages of Canada

Based on Bloomberg New Energy Finance, Canada has the fifth-highest potential for battery supply chains globally. And with good reason—as the market for clean, ethically made batteries expands, Canada has a lot to offer multinational corporations and trading partners. Canada's recent advancements

At least $1 billion in EV battery mineral extraction and materials manufacturing, $5.2 billion in EV battery cell and module manufacturing, $6.6 billion in EV assembly, and $1 billion in EV battery components and recycling were all attracted to Canada between 2020 and the time this report was finalized in June 2022.*14

Although it could be alluring to think that the job is over

Canada might not be able to reach its full potential in the absence of a more aggressive strategy, which is discussed later in this study.

For example, all of the cathode active materials produced at the new General Motors and POSCO facility in Quebec will be exported to the United States33. Meanwhile, Windsor recently lost out on securing a major battery materials plant, reportedly due to a lack of infrastructure planning. This loss prevented Windsor from taking advantage of Canada's competitive advantage in clean electricity.34

Furthermore, the majority of significant EV battery operations in North America are joint ventures with well-known global corporations, meaning that foreign businesses keep their intellectual property and manufacturing know-how.

Canada will have to direct its resources toward the most strategically important projects and supply chain segments between now and 2030. These are the ones that, in addition to providing the most financial gain, make use of Canada's special assets and further a wider range of national goals. When properly executed, Canada's battery potential can surpass its individual components.

Canada's battery business was sparked by the federal and provincial governments, and as a result of their efforts, the country has made some significant transactions and established itself on the global battery map.