US-Canada Trade Tensions Escalate Amid Accusations of Unfair Practices
Canada's economy has been built around international trade, and it appears to be an unlikely target for a US trade war. However, President Donald Trump has criticized Canada for what he perceives as unfair trade practices.
The US buys more from Canada than any other country, with Canadian imports totaling $342 billion in 2025. This makes Canada the second-largest market for American farmers, after Mexico.
Despite this significant trade relationship, Trump has accused Canada of cheating the US and strangling its industries. He has imposed tariffs on $20 billion worth of Canadian products and threatened to withdraw from the three-way agreement with Canada and Mexico.
However, experts argue that Canada's economy is actually more open than many people realize. According to the World Bank, trade accounts for 64% of Canada's economic output, compared to just 25% in the US. The Heritage Foundation ranked Canada No. 14 on its Index of Economic Freedom, while the US ranked No. 22.
One area where Canada does protect its domestic industries is dairy farming. The country has a supply management system that imposes tariffs of over 200% on most dairy products once they've exceeded a quota.
The trade dispute between the two countries has significant implications for both economies, with the US running a trade deficit with Canada due to its reliance on Canadian oil imports. Despite the tensions, there is still time for a deal to be reached before the ban on some Canadian products takes effect on September 29.