Canada: Trade Partnerships

The United States remains overwhelmingly Canada's most important trading partner, purchasing about three-quarters of Canadian exports and supplying roughly half of its imports, according to Global Affairs Canada's 2024 trade figures. China ranks a distant second on both sides, followed by the United Kingdom, Japan, and Mexico among export markets, and by Mexico, Germany, and Japan among import sources. Canada's exports are dominated by crude oil and other mineral fuels, motor vehicles, gold, and machinery, while its imports lean toward vehicles, machinery, electrical equipment, and pharmaceuticals.

Canada's trade with the United States is governed by the US-Mexico-Canada Agreement (USMCA), which underwent its mandatory joint review in July 2026. The US Trade Representative's office stated that the agreement would not simply be renewed in its existing form, leaving USMCA legally in force while the three countries continued negotiations. As of September 2026, the review had not been resolved.

The period leading up to the review was marked by escalating US tariffs on Canadian goods, including steel and aluminum duties raised to 50 percent, new duties on autos and softwood lumber, and a broader baseline tariff on remaining exports. Canada's government responded with its own countermeasures, imposing retaliatory tariffs on roughly 20 billion dollars of American goods that took effect on September 8, 2026. The dispute marked one of the most significant strains in US-Canada trade relations in decades, given how closely the two economies remain integrated.