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The Reliance of Canadian Imports on the US is Worse Than you Think

The reliance of the Canadian economy on its trade with the US has long been discussed (Beaulieu and Song, 2015), and the debate was recently revived by the corona-crisis and the renegotiation of NAFTA. A key statistics often used to gauge this dependency is that more than half of Canadian imports originate from the US.

We argue here that Canada's reliance on the US is even greater than what is usually thought. By examining data recording the value of Canadian imports by product, production country, exporting country and transport mode, we show that the US is not only the main supplier of Canada, but also a critical logistical hub for Canadian imports that are not produced in the US. Half of the goods imported from non-US suppliers enter Canada through the US-Canada border. In total, about 80% of Canadian imports are tied to the US, either because the goods are produced there, or because the goods cross the US to enter Canada.

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