U.S. president-elect Donald Trump says the U.S. doesn’t need anything Canada has. Experts say there are at least 594 billion reasons why he’s wrong.
Economists, supply chain professionals and trade experts say the U.S. depends on Canada for everything from oil and gas to cars and softwood lumber — and even some chocolate.
The American president-elect was, perhaps not shockingly, mostly bluster when he made the claim Tuesday “we don’t need anything they have,” while also threatening to make Canada the 51st U.S. state, said Pedro Antunes, chief economist at the Conference Board of Canada.
“There’s almost $600 billion a year in exports that we send to the U.S. You can’t just turn a key and get that from somewhere else,” said Antunes.
In 2023, the most recent year for which annual data is available, Canadian exports to the U.S. totalled $594.5 billion (Canadian), according to official statistics from the federal ministry for Innovation, Science and Economic Development.
In top spot at $130.3 billion? Crude oil. Other petroleum products being shipped to our southern neighbour added up to another $36.6 billion.
Even the American government’s own trade figures show that the U.S. imports hundreds of billions of dollars of products from Canada. Through the first 11 months of 2024, the U.S. brought in $377.2 billion (U.S.) in Canadian imports. (That’s $542.5 billion Canadian).
While there might be a way to replace some Canadian products, it would take time, and be more expensive, Antunes said.
“It would definitely be inflationary,” Antunes said.
Supply chain guru Fraser Johnson agreed.
“It’s easy to say, ‘We’ll buy our oil somewhere else,’ but it’s just not practical or realistic,” said Johnson, a business professor at Western University’s Ivey Business School.
While the U.S. could theoretically replace Canadian oil with crude from the Middle East or by boosting its own production, neither scenario is ideal, argued Johnson.
“Would you import it from the Middle East? That means paying for transportation in tankers. Would you increase production in the U.S.? That means more fracking,” said Johnson.
The increased cost for importing oil from farther away than, oh, say, their neighbour, would also make life more expensive for everyday Americans, something that would likely upset Trump’s voting base, Johnson said.
“That would be inflationary, and one of the things Trump ran on was stabilizing the economy and getting inflation under control,” said Johnson.
The automotive industry is so tightly integrated on both sides of the border that Trump’s claim defies logic, argued Flavio Volpe, CEO of the Automotive Parts Manufacturers’ Association.
“He’s flooding the zone with nonsense,” said Volpe, adding that only 12 million of the 17 million vehicles sold in the U.S. each year are manufactured domestically. Roughly 1.6 million are made in Canada, Volpe said.
If Trump’s ultimate goal is to lure some of that production back to the U.S., said Volpe, it’s unlikely to happen overnight. And his threats of tariffs aren’t earning him any allies among automakers, especially the Big Three manufacturers — Ford, GM and Stellantis.
“They’d probably be saying, ‘You’ve just hit my bottom line, and now you want me to invest in a new plant?’ ” Volpe said of automakers.
While doing an end-run around Canada for oil would be possible — albeit expensive and impractical — it would be a complete non-starter when it comes to softwood lumber and newsprint, said lumber industry analyst Kevin Mason.
“Canada’s irreplaceable right now,” said Mason, managing director of B.C.-based ERA Forest Products Research. “There’s no way to buy around Canada, for at least the next decade.”
In 2023, Canada exported roughly $7.5 billion worth of lumber to the U.S., mainly from B.C., said Mason. That added up to almost 12 billion feet of lumber, a crucial supply for the U.S. building industry. Canada also supplies between 50 and 60 per cent of newsprint used in the U.S., Mason estimated.
“The reality is that if the U.S. wants to keep building houses and reading newspapers, they have to import from Canada. There is no other option,” said Mason.
While there’s plenty of lumber in the U.S. south, new mills would need to be built to process it, said Mason. And that, he added, would take years.
As for lumber supplies from Europe? Mills across Atlantic aren’t set up to process lumber in North American sizes, Mason said.
“They could get a bit more from Europe, but their mills are set up to produce boards in metric measurements. Retooling their plants would take time and money, even if they wanted to,” said Mason.
If the lumber supply could be a concern, a shortage of newsprint probably isn’t keeping the notoriously anti-press Trump up at night, Mason suggested.
“I guess it would be one way for Trump to stick it to the New York Times and Washington Post,” Mason said.
