The Ties that Bind: Canada-United States Trade

Officials from the United States, Canada and Mexico recently abandoned plans to wrap-up NAFTA renegotiation talks by year-end and extended the deadline to March 2018. Media reports describe a contentiousness to the negotiations particularly around U.S. demands for major concessions as well as a so-called “sunset-clause,” which stipulates that NAFTA would expire after five years unless the parties agreed to extend it.

Recent decisions by the United States to impose tariffs on Canadian softwood lumber and Bombardier jets have signaled that the current administration is willing to put words into action when it comes to erecting trade barriers, at least to some extent. While the most vitriolic criticism of trade during the campaign trail centered on Mexico, tariffs imposed so far this year also demonstrate a concern for re-forming trade with America’s northern neighbor.

Canadian stakeholders have understandably been expressing more uncertainty over the future of trade relations with the United States. A comprehensive analysis of the NAFTA negotiations is outside of the scope of this report. What we offer is a fact-based analysis of the trade dynamics between the United States and Canada so decision makers on both sides of the border can better frame their thinking on the issue. We evaluate claims that NAFTA has cost American manufacturing jobs and examine the nature of the trading relationship between the United States and Canada.

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