Infographic Series: Canada-U.S. Trade and Investment in the Midst of a Trade War

In addressing the Canadian Parliament in 1961, President John F. Kennedy said, 

“Geography has made us neighbours. History has made us friends. Economics has made us partners.  And necessity has made us allies”. 

Some twenty-six years later, in announcing the U.S. government’s intention to enter into a free trade agreement with Canada, President Ronald Reagan noted, “The people of the United States and Canada have had a long and harmonious friendship that is the envy of the world. Now, in addition to sharing the world’s longest undefended border, we will share membership in the world’s largest free trade area.” And on October 1, 2018, President Donald Trump speaking at the Rose Garden, emphasized that the United States, Canada, Mexico Free Trade Agreement (USMCA) was “a truly extraordinary agreement” that it “formed a great partnership”.    

Given this rich history of partnership, it has been shocking to see President Trump sign executive orders and then proceeding on March 4, 2025 to impose sweeping tariffs of 25% on all goods and 10% tariff on energy exports from Canada. To make matters worse, on March 12, 2025, President Trump is scheduled to invoke section 232 of the Trade Expansion Act of 1962, to impose additional tariffs of 25% on all imports of steel and aluminum on the grounds that they constitute “unfair trade practices” and “global excess capacity” undermining national security. For Canada, the implications are even greater as these targeted tariffs will be stacked to reach 50% on Canadian aluminum and steel. In addition, President Trump has threatened to impose an additional 25% tariff on April 2, 2025 following the broader trade review that his administration is undertaking. He has also threatened to impose further reciprocal tariffs on countries that impose retaliatory tariffs. All of these measures put one of the world’s most successful trading relationships at risk.  

Since taking office on January 20, 2025, President Trump has suggested a number of reasons for the tariffs from border security concerns (in-flow of illegal fentanyl to illegal migrants into the U.S), to Canada not meeting its NATO commitment of 2% of GDP military spending to unfair trade practices (Canada’s supply management system and restrictions of banking institutions) to America First Policy (repatriating jobs back into the US and not requiring Canadian cars, lumber and oil and gas).  

Perhaps the most egregious unsubstantiated justification provided by President Trump has been that the United States subsidizes Canada to the tune of $200B annually. He reiterated this view in his address to the joint session of the Congress on March 5, 2025. To that end, the President has repeatedly attacked Canada’s sovereignty proposing that “Canada is the best candidate to become the 51st state” and that it will use “economic force” to achieve this outcome.     

In response to President Trump’s actions, Prime Minister Trudeau has delivered two forceful addresses to Canadians and Americans outlining a comprehensive set of measures including countervailing tariffs of $155B and imposing further tariffs on a dollar-for-dollar basis as well as using non-tariff measures. Provincial and Territorial Premiers have also introduced other measures against U.S. export goods and services to Canada.

With the onset of an unprecedented trade war and the USMCA/CUSMA scheduled to expire in July 2026, the Lawrence National Centre for Policy and Management has prepared a series of infographics on Canada-U.S. trade relations and investment with a view to informing students, faculty, leaders, and citizens about the importance of trade to the Canadian economy, the mutual benefits of Canada-U.S. trade and investment, and the implications and unintended consequences of the ad hoc and ill-informed tariffs proposed by President Trump on Canada.