Hidden Surplus Exposed: Canada Trade Deficit Misleads US Economic Policy

A new report from the Institute for Energy Research (IER) reveals that the U.S. trade deficit with Canada is not as significant as it seems.

The IER found that most of what America buys from Canada is discounted crude oil, natural gas, potash, and unfinished metals that are refined in U.S. facilities into higher-value products and exported at a premium.

By updating trade accounting to grant domestic designation to raw Canadian inputs refined in the U.S., policymakers can remove tens of billions of dollars from the trade deficit.

Crude oil, specifically, is the largest U.S. import from Canada, averaging $93 billion per year over the past five years. Reclassifying all 4.5 million barrels per day of Canadian crude as domestic would eliminate the bilateral trade deficit entirely.