How connected is Canada to our neighbours to the south?

Experts and government officials have warned the Canada–U.S. trade war will have cascading impacts across a number of industries and communities critical to Canada’s economy, with the potential to disrupt businesses, economic growth and the livelihood of families on both sides of the border. 

Here is some information to help readers better understand the dynamics of the economic ties between the two countries.

Value of Canadian exports to the United States in 2023. 

(Trading Economics)

In Peel, manufacturing and transportation dominate the local economy with hundreds of small and medium-size businesses in the region that do business with the U.S. including dozens that support the automotive industry. According to regional data, Peel has the highest proportion of population employed in manufacturing, transportation and warehousing industries across the GTA. As of the 2021 Census, more than 90,000 Peel residents were employed in the manufacturing sector with over 85,000 in retail trade and roughly 69,000 employed in transportation and warehousing.

The Canadian Chamber of Commerce’s Canada–U.S. trade tracker shows that last year nearly half a trillion dollars ($438 billion) in two-way goods were traded between Ontario and the U.S. Since the start of 2025 alone, more than $311 billion worth of trade has crossed the Canada–U.S. border, up from $258 billion reported by The Pointer two weeks ago. The CCC has estimated tariffs could shrink Canada’s GDP by 2.6 percent, costing Canadian households an average of $1,900 (CAD) annually. In the U.S., the organization predicts this would result in a 1.6 percent GDP drop, with families spending $1,300 (USD) more a year. 

Many of Ontario’s key exports are linked to industries with a heavy presence in Peel.

(Canadian Chamber of Commerce)

As the trade tension continues, it is critical to understand the difference between tariffs and export taxes. While they are both forms of levies on goods crossing borders, tariffs are imposed on goods imported into a country. Export taxes are placed on goods leaving a country. In the case of tariffs, importers will typically pay levies to their own government while export taxes are added to the cost of goods sent across the border paid to the government on the exporting side. 

With Canada placing taxes on U.S. imports earlier this month as a retaliatory measure, tariffs on American dairy, for example, means a Canadian importer would pay that tax as it comes across the border, and it would then be passed down to consumers paying an increased price — essentially driving up costs for Canadians. But if Canada were to put in place an export tax on electricity being sent south of the border, for example, governments in the U.S. buying the electricity would pay for those costs, which would not be passed onto Canadian consumers, but likely would be covered by their American counterparts. 

The Stellantis auto assembly in Brampton, and the auto sector as a whole, are key pieces of Peel’s economy.

(Stellantis)

In an effort to push back against President Donald Trump’s heavy-handed tactics, Ontario Premier Doug Ford announced a 25 percent surcharge on electricity exports to Michigan, New York, and Minnesota, before walking back from the threat.

Though he first claimed the 25 percent surcharge on electricity sold to the U.S. — the U.S. bought $3.2 billion (USD) of electricity from Canada in 2023 (roughly 17 percent from Ontario) and sold $1.2 billion (USD) to us — would remain in place indefinitely, he withdrew the threat last week after Trump vowed to double tariffs on steel and aluminum to 50 percent.

Although Ford claimed U.S. “factories are going to be empty, they're going to be shut down, there's going to be unemployment, inflation is going to hit,” as a result of his electricity threat, data suggests otherwise. According to the U.S. Energy Information Administration, electricity exchanges between the two countries “remain relatively small,” and account for less than one percent of “their respective total regeneration.”

There is no significant reliance by any U.S. state on Ontario electricity.

But other exports could be a focus of future export bans or export taxes imposed by Canada.

Canadian exports to the U.S. accounted for $439.6 billion (all figures are in US dollars) in 2023 (the latest numbers available) and U.S. exports to Canada accounted for $348.41 billion last year. While the largest exports from Canada to the U.S. were mineral fuels and oils at $128.51 billion in 2023, the U.S. only exported $26.40 billion of the same to Canada in 2024. Canada exported $58.21 billion worth of vehicles to the U.S. compared to $53.67 billion of vehicle exports the U.S. sent to Canada. We were also a larger exporter of cereal, flour, starch, and milk products to the U.S. with $6.47 billion worth of goods sent south in 2023, compared to $3.19 billion of the same exported to us by the U.S. 

Along with the two countries' strong trade connection, Canadians have historically had a sizable footprint in the housing industry in the United States with Canadian buyers purchasing approximately 7,100 residential properties in the country in 2024 alone. A report from the National Association of Realtors found that Canadian buyers accounted for 13 percent of all foreign real estate transactions in the U.S. between April 2023 and March 2024, making them the largest group of foreign buyers, with Canadians spending $5.9 billion on residential real estate in the U.S..

Canada and the U.S. also have strong tourism ties. Over 20.4 million Canadians travelled to the U.S. last year, according to the U.S. Travel Association, spending roughly $20.5 billion (USD) and supporting more than 140,000 jobs. On the other side of the border U.S. residents made approximately 23.4 million trips to Canada, marking a 10.7 percent increase from 2023. With the raging trade wars and the longstanding relationship between the two countries now uprooted, the Association warns that a 10 percent reduction in Canadian travel could result in 2.0 million fewer visits, $2.1 billion in lost spending, along with 14,000 job losses. 

The connection between the economies of Canada and the U.S. extends beyond the simple exchanging of goods—deepening the potential impact of any future tariffs. 

“Input-output linkages between sectors create indirect connections between the two countries’ economies,” Trevor Tombe, a professor in the Department of Economics and The School of Public Policy at the University of Calgary, wrote in an October 2024 report. “Recent analysis by the OECD, (Organization for Economic Cooperation and Development) reveals that a substantial portion of what the United States imports from Canada embodies value-added that was originally generated in the United States. For example, suppliers to U.S. exporters may provide parts that are shipped to Canadian firms for further assembly or production, which are then exported back to the United States…Given the deep interconnections between the two economies, small changes in policy can have significant implications for both countries.”

Email: [email protected] 

Twitter: @mcpaigepeacock

At a time when vital public information is needed by everyone, The Pointer has taken down our paywall on all stories to ensure every resident of Brampton, Mississauga and Niagara has access to the facts. For those who are able, we encourage you to consider a subscription. This will help us report on important public interest issues the community needs to know about now more than ever. You can register for a 30-day free trial HERE. Thereafter, The Pointer will charge $10 a month and you can cancel any time right on the website. Thank you