Does the U.S. really subsidize Canada, like Trump says it does?

President Donald Trump speaks about the economy during an event at the Circa Resort and Casino in Las Vegas, Saturday, Jan. 25, 2025. (AP Photo/John Locher)

Is it a $100 billion or $200 billion trade deficit, or is it a subsidy?

U.S. President Donald Trump has made various and repeated claims about his country’s trade relationship with Canada to justify his tariff threats.

“Canada’s been very tough to deal with over the years,” said Trump on Thursday in a virtual address to the World Economic Forum in Davos, Switzerland. “It’s not fair that we should have a $200 billion or $250 billion deficit.”

He has repeatedly pointed to the purported deficit during his speeches and in remarks to reporters. He has also called it a subsidy.

What is Trump talking about?

Canada and the U.S. have one of the world’s most integrated trading partnerships. The U.S. imports more Canadian goods than it exports north of the border. That difference is called a trade deficit.

In 2023, the U.S. trade deficit with Canada was US$40.6 billion, according to research by the Centre for Future Work based on United States Census Bureau data.

In 2024, the trade deficit is estimated to be around US$45 billion, according to TD Economics.

In a report published online, TD noted that it’s unclear where Trump got the $200 billion figure, which “is roughly four to five times the officially reported statistics.”

The U.S. has other, larger deficits

Those numbers are small relative to the roughly $1 trillion in goods and services that cross the border both ways each year.

It’s also smaller than other markets. Data from the U.S. Census Bureau show the U.S.’s trade deficit with Canada was only the 10th largest in 2023.

The U.S. trade deficit with Canada is significantly smaller than that of countries like China and Mexico, even though Canada is the United States’ largest export market.

“Mr. Trump quite literally makes these numbers up and they can change from one day to the next, $100 billion, $200 billion, $300. It’s like a game show,” said Jim Stanford, Economist and Director of the Centre for Future Work based in Vancouver.

A deficit or a subsidy?

Trump hasn’t clarified why he’s referred to the trade deficit with Canada as a subsidy.

“I think he and his team do understand the economics of it, in their hearts they know that a trade deficit is not a subsidy,” said Stanford.

“If anything, it’s the rest of the world subsidizing America because they run a big trade deficit with the world every year.”

“In economics, subsidy is government providing money or something of worth to a private entity or individual to get them to produce something or do something,” said Carlo Dade, Director of Trade and Trade Infrastructure for the Canada West Foundation.

“I haven’t seen the cheque arrive in Ottawa from Washington, DC made out to the Canadian Government,” he added.

Canada’s largest export is oil

Crude oil makes up the majority of Canada’s exports to the U.S. If you remove it, that deficit becomes a surplus.

“Think of every dollar of the deficit with the U.S., and it’s mostly oil, as a contribution to a job,” Dade said. “We don’t refine oil in Canada. The Americans do.”