As Donald Trump pondered the use of “economic force” to potentially acquire Canada, the US president-elect also ignored the importance of his country’s most important trading partner.
“We don’t need anything they have,” Trump said of Canada during a news conference at his Mar-a-Lago estate in Florida earlier this week.
He rejected any reliance by the United States on trade with its northern neighbor and appeared to ignore that Canadian exports to the United States in 2023, for example, were nearly $418.6 billion, according to the U.S. Census Bureau.
Trump also didn’t mention the roughly 4.4 million barrels of oil the U.S. receives per day from Canada, according to the U.S. Energy Information Administration, just over half of its total imported oil and its top import.
He focused primarily on the automobile, lumber and dairy industries, saying the U.S. could meet Americans’ great demand for these products.
But as numbers and experts suggest, U.S. demand means Canada may not be easily replaced.
automobile
Trump told reporters that the U.S. doesn’t need “their cars” when it comes to Canada and that he would rather make them in Detroit.
While Canada does not produce its own vehicles for mass production, it is home to plants owned by U.S. automakers Ford, General Motors and Stellantis North America.
Because of its hunger for vehicles, the United States is the largest car importer in the world – and Canada is one of its largest suppliers. For example, more than 1.5 million vehicles were produced in Canada in 2023, according to the Canadian Vehicle Manufacturers’ Association.
In a normal year, about 80 percent of vehicles manufactured in Canada are exported to the United States, according to Flavio Volpe, president of the Automotive Parts Manufacturers’ Association
So, as Trump suggests, could U.S. automakers move all of their factories out of Canada, locate in their country and produce all of their vehicles from home?
“Absolutely,” said Dimitry Anastakis, a professor of business history at the University of Toronto’s Rotman School of Management and an expert on the automotive industry.
But there is one big catch: the collapse of the North American auto industry, he said.
“It could help Americans and American producers, but the cost of doing so would be so enormous that it would likely plunge North American industry into recession,” he said. “These are supply chains that have been developed over decades.”
U.S. automakers are building plants in Canada to take advantage of lower wages, lower exchange rates and also a skilled workforce. While moving all Canadian plants to the U.S. would be a boon for that country’s workforce, it would also mean costs for vehicle consumers on both sides of the border would rise dramatically, Anastakis said.
This week, U.S. President-elect Donald Trump said the U.S. doesn’t need Canada’s auto industry as he threatened to use “economic force” to make Canada a nation and impose 25 percent tariffs on Canadian goods. But is that all talk? The CBC’s Jennifer La Grassa speaks with Dimitry Anastakis, an economics professor at the University of Toronto, and Peter Frise, an automotive engineering professor at the University of Windsor.
It would take years to transform their supply lines and would be very costly for U.S. manufacturers, he said, because they have sunk so much money into their operations in Canada.
“That statement from (Trump) about ‘We could just build them all here,’ like snapping your fingers, is completely divorced from reality because of the way the industry has evolved over the last 60 years.” said Anastakis.
Volpe said U.S. manufacturers would suffer large losses from relocating and building new factories in the U.S., which would take years. “Creating an us-versus-them context is a complete fabrication,” he said.
Wood
According to the Washington, D.C.-based National Association of Home Builders, domestic production of softwood lumber in the U.S. is insufficient to meet demand from the homebuilding industry.
“To fill this gap, the U.S. relies on softwood lumber from Canada to meet our lumber needs,” the group’s president and CEO Jim Tobin said in an emailed statement to CBC News.
A lot of wood is used in the United States, and a significant amount comes from Canada.
“The U.S. imports about 25 percent of total softwood lumber consumption from Canada, which represents a fairly large market share,” Rajan Parajuli, associate professor of forest economics and policy at NC State University in Raleigh, North Carolina, told CBC in an email News.
Parajuli said the U.S. lacks the capacity to meet domestic demand.
But Trump said the U.S. doesn’t need Canadian timber and that it has “vast timber fields” whose restrictions he could lift with an executive order.
However, Parajuli said it was still “highly unlikely” that the U.S. would be able to meet demand without Canadian timber. While the U.S. has enough standing trees, the sawmill industry has limited capacity and a constrained supply chain, he said.
In particular, the lumber industry has shrunk in recent decades, he said.
Russ Taylor, a British Columbia-based forestry consultant, said Trump could loosen regulations to allow more logging in U.S. public forests, but that would require more loggers, truck drivers and workers.
“Where should the workforce, skilled workers and capital come from? This doesn’t happen overnight.”
President-elect Donald Trump reiterated his issues with Canada on Tuesday, citing concerns about Canada’s military and claiming that the U.S. is subsidizing the Canadian economy. He ruled out using military force against Canada and said he would rely on “economic force” when he returns to the Oval Office.
Taylor said Trump is also forgetting the manufacturing aspect of the industry and that factories in the U.S. are already operating at about 85 percent capacity.
“You could probably send more logs through the U.S. sawmills, but you wouldn’t gain much, you would gain some,” he said.
But with about 25 percent of lumber coming from Canada, a five or 10 percent increase in production in the U.S. means it’s “still not even close” to meeting demand, Taylor said.
“So the bottom line is that the U.S. needs Canadian lumber, period.”
dairy
According to Agriculture and Agri-Food Canada, Canada exported about C$488 million worth of dairy products to the United States in 2023.
But Trump said the U.S. doesn’t need Canadian dairy products and specifically mentioned Canadian milk. And it’s true that Canada doesn’t export much milk to the US – about $17 million worth in 2023.
But there is a market for Canadian cheese, said Andrea Berti, president of the U.S.-based Cheese Importers Association of America.
Berti said the U.S. imports a lot of sheep and goat milk cheese from Canada, products that are not very common in the U.S. where the focus there is more on cow’s milk cheese.
“Goat milk is also produced in the US, but the proportion is lower. “That’s not enough to meet U.S. needs,” he said. “That’s why we’re going to Canada.”
Berti said Americans also come to Canada to buy French-style cheeses, but also artisanal Quebec cheeses that are popular in specialty stores.
Donald Trump has repeatedly claimed that the United States is “subsidizing Canada to the tune of $100 billion.” Where does this number come from? And does Canada really get a free pass from the USA? Andrew Chang delves into the math, money and politics of Canada-U.S. trade relations to find out how much — if anything — of what Trump says is actually true. Images collected from Reuters, Getty Images and The Canadian Press.
