Trading with Canada as Partners

How any Purchase American Plan Risks Trading Markets in Canada

Feb 10, 2009 Shelley Aylesworth-Spink

The U.S. and Canada are strong trading partners and moves to shrink foreign investments or limit trade with buying American only schemes risks both countries.

Proof of the close links between the Canadian economy and trade levels with the United States came quickly when President Barack Obama introduced an economic stimulus package with a strong Purchase American focus on U.S.-made iron and steel for public works projects.

Canadian politicians and officials quickly set the diplomatic wheels in motion to limit the measure, prompting the question: How much do the U.S. and Canadian economies rely on each other and just how vital is trading with Canada?

Trading With Canada Good Trade Policy

The answer is that both countries depend hugely on each other for a liberal amount of trade of not just consumer goods but the essentials of everyday life.

The U.S. stimulus plan brought attention to the fact that Canada is the top trading partner of the U.S., exporting about $5 billion each year worth of steel and iron. However, the Canada-U.S. Trade relationship goes much deeper than metal.

Trading Partners, Foreign Investments Key to Economic Health

According to the U.S. Department of Commerce buyus.gov website, the two countries have the closest and most wide-ranging trade relationship in the world. Every day, a staggering $1.5 billion in goods crosses the border.

The volume of people crossing the border is no less stunning. The Canada -U.S. Border is the longest common border in the world with about 300,000 people moving across it each day.

In 2007, the U.S. Department of Commerce reported that total trade between the two countries exceeded $560 billion. The trade that crosses the Ambassador Bridge between Detroit, Michigan and Windsor, Ontario equals all U.S. exports to Japan.

The proximity of Canadian provinces the U.S. States allows for a great deal of reliance on both sides for daily trade. It is not surprising, then, that Canada is the leading export market for 36 of the 50 U.S. States, and ranks in the top three for another 10 States.

In total, Canada is a larger market for U.S. goods than all 27 countries of the European Community combined. This fact is made more significant when you realize that the population of the European community is more than 15 times that of Canada.

Trading Partners Rely on Robust Trading Markets Between U.S., Canada

According to Statistics Canada, the U.S. is Canada's largest foreign investments market. At the end of 2007, the stock of U.S. foreign direct investments in Canada was $289 billion, or about 59 percent of total foreign direct investment in Canada.

Energy and food are also integrated into the trade market and lives of Canadians and Americans.

The U.S. is Canada’s leading agricultural market, taking 55 percent of its agricultural exports in 2007. At the same time, the two countries enjoy the largest energy trading relationship in the world. Canada is the single largest foreign supplier of energy to the U.S., providing 17 percent of U.S. oil imports and 18 percent of U.S. natural gas demand.

Canada Trade Extends to More than Trading Markets

Canada is a major supplier of electricity, mostly clean and renewable hydroelectric power, to New England, New York, the Upper Midwest, the Pacific Northwest, and California. Canadian uranium helps fuel U.S. nuclear power plants.

The U.S. Economy relies on Canada with millions of American jobs depending on Canadian imports, according The Embassy of the United States. Trade policies shared between the countries have reduced unemployment rates.

The trading relationship between the U.S. and Canada relies on a strong trade policy between the two nations. As each country flexes its muscles to protect its economy, officials from both countries have sound economic reasons to rise quickly to defend one of the most liberal and important trade markets in the world.

The copyright of the article Trading with Canada as Partners in International Trade is owned by Shelley Aylesworth-Spink. Permission to republish Trading with Canada as Partners in print or online must be granted by the author in writing.

Trading Partners the U.S. and Canada Important	Foreign Investments Part of Trading with Canada	Investment in Canada Includes Robust Trade
Purchase American Only Idea Risks Trading Markets	Trading Partners Rely on Trading Markets