Economic Interdependence: Canada-US Trade

Canada and the United States have a special relationship. Shared location, comparable ideals, same interests, deep personal relationships, and significant, multifaceted economic links form the foundation of the Canada-United States cooperation. Our two countries have a strong and long-standing defense and national security alliance, which provides both countries with more security than they could achieve independently. Trade and investment between Canada and the United States supports millions of jobs and contributes to the safe and efficient flow of goods and people over the border, which is critical to both nations' economic competitiveness and success. The Canada-United States-Mexico Agreement (CUSMA)Footnote1 strengthens Canada's strong commercial links with the United States and Mexico while providing major economic benefits to all three countries.

Canada has an embassy in Washington, D.C., consulates general in Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Los Angeles, Miami, Minneapolis, New York, San Francisco, and Seattle, as well as three trade offices and fourteen honorary consuls. The United States has an embassy in Ottawa and consulates general throughout Canada. Overall, there are over a hundred Leader-level commitments that outline a path forward for achieving the new green economy, including the work of a new Energy Transformation Task Force (led by the Deputy Prime Minister) and strengthening Canada-US collaboration across a range of mutual interests and shared domestic, bilateral, and multilateral priorities.

Security and defense cooperation

Canada and the United States are important allies and defense partners, and we work closely together to address international crises and protect common values abroad. Our shared goals of strengthening continental defence and ensuring global peace and security have resulted in extensive cooperation between our respective defense and national security agencies.

Our bilateral defense and national security relationship encompasses all aspects of cooperation, including shared continental defense, commitments to collective objectives through the North American Aerospace Defence Command (NORAD), the North Atlantic Treaty Organization (NATO), and the Five Eyes, intelligence sharing, defense materiel cooperation, and strong relationships between law enforcement agencies. Canada and the United States recently agreed to speed NORAD modernization. In addition to previously announced investments in NORAD and the Canadian Armed Forces that support continental defence more broadly (including F-35 fighter jets and related infrastructure), Canada is working with the United States to reduce violent extremism, child sex exploitation, cross-border smuggling, and firearms violence on both sides of the border, as well as to strengthen cybersecurity cooperation to improve the resilience and protection of our critical infrastructure.

Trading

Canada and the United States have the world's most comprehensive trading relationship, supporting millions of jobs in both countries. We are each other's top trading partners, with approximately $3.6 billion in goods and services crossing the border every day in 2023. Many of these items require co-investment and co-development, making our networks extremely linked. Canada and the United States also have a strong investment relationship. The United States is the single largest investor in Canada, and Canada was the largest source of foreign direct investment (FDI) in the United States as of the end of 2022. In addition, Canada is the single greatest foreign energy supplier to the US.

For nearly four decades, commerce between Canada and the United States has been governed by a series of free trade agreements, the most recent of which, the Canada-United States-Mexico Agreement (CUSMA), went into effect in July 2020. CUSMA underpins our strong, balanced commercial relationship with the United States and Mexico, which is based on resilient and effective supply chains in all essential sectors of the economy.

Environment, Water, and Climate Change

Canada and the United States are close collaborators in climate and environmental action. By ensuring regulatory alignment across integrated sectors, Canada and the United States have strengthened economic ties and made significant progress in reducing methane emissions, establishing a critical minerals supply chain, accelerating the transition to zero-emission vehicles, and moving toward a net-zero grid. I believe a good analogy is that we are like brothers. We largely speak the same language. However, one brother had to go and become quite fluent in French. We argue on a number of topics. Sometimes one brother simply shakes his head at the other sibling's actions. We mainly get along, and we enjoy visiting one other's homes. (Usually) When the going gets tough, we'll defend each other against any threat.

Internationally, except perhaps in the United Kingdom, the extraordinarily-close and beneficial relationship between Canada and the United States does not get a lot of attention. Even the United Kingdom tacitly recognizes that although Canada politically was at one time a spawn of Britain, there came a time when the United States took over primary custodial relations with Canada—and only then did Canada come into its own with the Battle of Vimy Ridge in World War I. This, at the same time as Canada maintaining seniority in the Commonwealth of Nations, along with Australia and New Zealand (to round out the “Anglosphere”). This is a major reason why Canada is ranked as a middle power.