The Importance of Trade Between Canada and the US

The bilateral trade and investment relationship between the United States and Canada is the world's largest and most comprehensive, directly supporting millions of employment in both countries and totaling US$1.95 trillion. The United States' primary export market is Canada, which accounted for 14.2% of all U.S. goods exports in 2022. Canada's status as the United States' principal trading partner was preserved in 2022. On a daily basis, the United States and Canada exchange more than US$2.5 billion in products and services. The 2022 bilateral investment stock exceeded the trillion-dollar threshold for the first time, with a total of US$1.027 trillion and two-way trade in goods and services totaling US$919.2 billion, according to the Bureau of Economic Analysis (BEA) of the Department of Commerce.

The United States exported nearly US$429 billion in products and services to Canada in 2022, representing a 16.7% increase from the previous year. Thirty-four U.S. states recognize Canada as their primary export market, while 45 U.S. states regard it as either their primary or secondary export market. The total U.S. exports to Canada in 2022 surpassed those to Denmark, France, Germany, Italy, Spain, and the United Kingdom cumulatively. Regardless of whether your organization is a novice or experienced exporter, Canada should be an essential element of your export growth strategy. U.S. service exports to Canada were valued at US$71.3 billion in 2022. The travel, professional, and management consulting services, and business services sectors were the primary exports of services from the United States to Canada.

In 2022, Canada continued to be the primary export market for U.S. agricultural exports, with a total of US$28.3 billion

Prepared foods, baked goods, cereals and pasta, fresh and processed vegetables, fresh and processed fruit, meat and meat products, nibble foods, non-alcoholic beverages, chocolate and cocoa products, condiments and sauces, coffee, wine, beer, and pet food are key categories. For the majority of industry sectors, Canada is a market that is highly transparent, open, and receptive to U.S. products and services. Due to their close geographic proximity and comparable lifestyles, the nations have developed a degree of cultural familiarity. A substantial French-speaking minority (23% nationwide) coexists with the majority of the population (75% nationwide) who speak English. Canada has two official languages. Québec (85% of the province) and New Brunswick (32% of the province) are the regions where the majority of French speakers concentrate.

In addition, the bilateral relationship is significantly influenced by investment. Canadian foreign direct investment (FDI) in the United States totaled US$683.80 billion in 2022, ranking Canada as the second-largest source of FDI in the United States (based on the country of ultimate beneficial ownership). In 2022, the United States served as Canada's primary source of foreign direct investment (FDI), with an investment stock of US$438.76 billion. In 2020, Canadian-owned firms' U.S. affiliates had a workforce of 844,600 Americans, invested $1.5 billion in innovative research and development, and contributed US$13.4 billion in U.S. exports.

Political & Economic Environment: For further information on the political and economic climate, please consult the U.S. State Department's website. In the words of President Biden, Canada is the United States' closest friend, collaborator, and ally. For more than 150 years, our two nations have fostered one of the most extensive and intimate partnerships. Canada is our most significant trading partner, with nearly $2.6 billion in products and services moving across our shared border, the world's longest land border, on a daily basis. This represents a nearly 20% increase from the previous year in 2022. Supporting millions of employment on both sides of the border, this trade is beneficial. Additionally, we have collaborated to address some of the most significant global issues, and our individuals maintain exceptionally strong familial and personal bonds.

While reaffirming the United States' enduring commitment to the U.S.-Canada partnership

President Biden has restored trust and confidence between our two countries during this Administrative Term. The partnership between the United States and Canada is advantageous to both our citizens and the global community. By collaborating, we are capable of accomplishing anything. Private sector investment is being motivated by the United States and Canada to foster inclusive economic growth and generate high-paying employment opportunities. Integrated supply chains will be established and North America will be rendered more competitive through the implementation of the Inflation Reduction Act and the CHIPS and Science Act. U.S. and Canadian corporations were granted $250 million in Defense Production Act (DPA) funding last year to mine and process critical minerals for electric vehicle and stationary storage batteries. Award recipients from Canada and the United States will be disclosed this spring.

Canada and IBM will facilitate the establishment of a cross-border semiconductor packaging corridor by offering substantial incentives as part of a memorandum of understanding to enhance and expand the packaging and testing capabilities of the Bromont facility. The agreement is expected to stimulate economic activity and employment in both Canada and the United States. Additionally, the United States announced $50 million in DPA funding for U.S. and Canadian companies to enhance the advanced packaging of semiconductors and printed circuit boards in North America. From its Strategic Innovation Fund, Canada will allocate up to CAD $250 million to semiconductor initiatives.

The United States and Canada have agreed to identify opportunities for collaboration between the two countries in order to promote training and employment opportunities in priority sectors, including clean energy and skilled trades

This initiative will bring together key stakeholders from multinational corporations, unions, state and provincial governments, and educational and training institutions to expand the pool of skills required for critical supply chains. In an effort to satisfy the increasing demand for electric vehicles in North America, the United States and Canada will collaborate with battery manufacturers, automakers, and organized labor to exchange training initiatives and cross-border credentials. The world's largest market-based energy trading relationship has been established between the United States and Canada, which serves as a solid foundation as we endeavor to achieve net-zero greenhouse gas emissions. Using USD $7.5 billion from the U.S. Bipartisan Infrastructure Law and CAD $1.2 billion to construct a network of electric vehicle fast chargers and community charging options on both sides of the border, we will strive to harmonize charging standards and establish cross-border alternative fuel corridors.

The Biden Administration's flagship international initiative, the Foundational Infrastructure for Responsible Use of Small Modular Reactor Technology (FIRST) program, will receive financial and in-kind support from Canada. The program is designed to assist partner countries in the development of nuclear energy programs that adhere to the most stringent safety, security, and nonproliferation standards. The Canadian Critical Minerals Infrastructure Fund will allocate CAD $1.5 billion to promote clean energy and transportation infrastructure initiatives, and an additional CAD $ 1.5 billion will be made available through the Strategic Innovation Fund to support advanced manufacturing, processing, and recycling. United States-Canada collaboration on supply chain resilience will be fortified by these mutual measures.