Canada: A Macroeconomic Study of the United States’ Most Important Trade Partner

Canada has become the most important trading partner of the United States in terms of total trade and agricultural trade. In 2005, exports to Canada amounted to 23 percent of total U.S. exports and 17 percent of U.S. agricultural exports, while imports from Canada amounted to 17 percent of total U.S. imports and 21 percent of U.S. agricultural imports. Canada is a large exporter to the United States of critical raw materials, including natural gas, petroleum, and wood products, and a substantial importer of finished industrial and consumer goods. Canadian agricultural exports to the United States are primarily in consumer processed goods such as beef, fish, seafood, breads, and confectionery items, while Canadian imports from the United States include baked goods, fruit and vegetable juices, and fresh fruits and vegetables. Canadian agricultural trade continues to grow in importance reflecting trade liberalization and greater integration of agricultural markets. The trade outlook is enhanced by Canada’s prospects for long-term economic growth of about 3 percent per year, which is underpinned by expected moderate growth in working-age population and labor productivity.