Canadian Trade Surplus with US Falls

Canada’s Job Losses Result from Higher Loonie and Weaker USA Economy

Jul 3, 2008
Daniel Workman

Lac Spruce - Sutton, Quebec - © Nicolas Raymond (morguefile 210524)

While Canada is rich in natural resources like oil, nickel and lumber, a slowdown in the USA can only lessen international demand for Canadian products and commodities.

Analysts who understate the effects of an American recession on Canada should consider the following international trade fact of life: the United States of America is the largest consumer of Canadian products, buying over 80% of total exports shipped from Canada.

Conversely, Canada imports about 55% of its international merchandise from the U.S.

In 2007, Canada exported an estimated US$433 billion worth of manufactured goods and resource materials onto the international trade marketplace. Canadian imports totalled roughly $387 billion, resulting in Canada’s $46-billion overall trade surplus last year.

Canadian Trade with U.S.

A closer look at Canada’s trade statistics with the United States reveals that Canada enjoyed a US$64.7 billion trade surplus with its American trade partner in 2007. The most recent surplus statistic is 25.2% higher than the Canada-US surplus in 2003 but represents a 9% decrease from its $71.8 billion surplus in 2006.

Exports from Canada to America

With a population of 33.2 billion, Canada exported US$313.1 billion worth of merchandise to the United States in 2007, a 3.5% increase from 2006 and up by 41.3% in 4 years. The following product categories represent 50% of Canadian exports to America.

Crude oil …US$38 billion – up 16.2% from 2006 (12.1% of Canada-to-U.S. exports)
New and used passenger cars … $36.8 billion – up 0.6% (11.8%)
Natural gas … $22.4 billion – down 6.7% (7.1%)
Other automotive parts and accessories … $15.3 billion – down 1.9% (4.9%)
Trucks, buses and special purpose vehicles … $11 billion – down 10.3% (3.5%)
Aluminum … $7.5 billion – down 2.1% (2.4%)
Other petroleum products … $7.4 billion – up 13% (2.4%)
Abrasives, belting, boxes and glass … $5.64 billion – down 3% (1.8%)
Plastic materials … $5.63 billion – down 3.3% (1.8%)
Fuel oil … $5.5 billion – up 23.9% (1.77%).

Burdened by slowing automotive industry sales, Canada’s top 10 export product categories experienced an overall gain of 1.7% in sales to the U.S. in 2007. This is less than half the 3.5% gain for the top 10 Canadian exports to the U.S. from 2005 to 2006.

Fastest-Growing Canadian Exports to America

Below are selected Canadian exports to America in 2007 with the highest percentage sales increases from 2006.

Nickel … US$2.1 billion (up 73.5% from 2006)
Food oils and oilseeds … $882.6 million (up 51.1%)
Computers … $689.3 million (up 48.4%)
Drilling and oil field equipment … $1.5 billion (up 44.9%)
Other military equipment … $492.2 million (up 44.8%).

Fastest-Declining Canadian Exports to America

Selected Canadian exports to America in 2007 with the highest percentage sales decreases from 2006 are listed below.

Cotton apparel and household goods … US$243.2 million (down 24.6% from 2006)
Finished molding, shingles and wallboard … $4.5 billion (down 24.3%)
Newsprint … $2.3 billion (down 21.5%)
Railway transportation equipment … $433.1 million (down 21.1%)
Lumber and rough wood … $5.3 billion (down 20.3%).

Canadian Imports from America

Canadian imports from the U.S. rose by 7.7% to $248.4 million in 2007, up by 46.2% since 2003.

Of American exports to Canada in 2007, the following product categories had the highest values and in total represented 37% of all U.S. shipments into Canada.

Other vehicle parts and accessories … US$24.1 billion – up 1.1% from 2006 (9.7% of Canadian imports from America)
New and used passenger cars … $15 billion – up 14.6% (6.1%)
Trucks, buses and special purpose vehicles … $12.5 billion – up 6.2% (5%)
Other industrial machines … $7.3 billion – down 1.6% (3%)
Engines and engine parts … $6.7 billion – down 0.3% (2.7%)
Electric apparatus … $6.1 billion – up 5.1% (2.5%)
Plastic materials … $5.6 billion – down 1.1% (2.3%)
Other industrial supplies … $5 billion – up 1% (2%)
Iron and steel mill products … $4.9 billion – up 12.4% (2%)
Industrial engines … $4.8 billion – up 1.9% (1.9%).

Last year, Canada’s top 10 import product categories from the U.S. grew by 4.2% from 2006. From 2005 to 2006, the top 10 Canadian imports from the U.S. had gained about 6.6%.

Fastest-Growing Canadian Imports from U.S.

Below are selected American exports to Canada in 2007 with the highest percentage sales increases from 2006.

Complete military aircraft … US$187.7 million (up 284,323% from 2006)
Musical instruments … $428 million (up 171%)
Fuel oil … $1.1 billion (up 79.8%)
Business machines and equipment… $1.2 billion (up 73.8%)
Corn … $494.8 million (up 72.8%).

Fastest-Declining Canadian Imports from U.S.

Selected American exports to Canada in 2007 with the highest percentage sales decreases from 2006 are listed below.

Nonfarm tractors and parts … US$194.2 million (down 29.6% in 2006)
Drilling and oilfield equipment … $656 million (down 25.3%)
Semiconductors … $2.4 billion (down 23.5%)
Computer accessories … $4.1 billion (down 22.1%)
Railway transportation equipment … $931.3 million (down 18.9%).

Sources for this Article

This article presents independent calculations and insights based on data drawn from the CIA World Factbook and the U.S. Census Bureau – Foreign Trade Statistics.