International trade plays a significant role in Canada’s economy. Although the United States remains Canada’s biggest trading partner, the latter’s trade relations with several Asian and European nations have also improved in recent years. A significant portion of Canada’s natural resources, such as oil, gold, nickel and uranium, are exported mainly to the United States. Agricultural products, including wheat and other grains, are also exported to the US, Europe and East Asia.
Canada Trade, Exports and Imports: Balance of Trade
A sharp rise in commodity prices and the global recession led Canada to post its first annual trade deficit in 34 years in 2009. According to Statistics Canada, the country’s trade balance with the rest of the world plunged into red and reported a deficit of $4.8 billion. The country had reported a $47 billion trade surplus in 2008. Canada’s exports to the rest of the world declined by 35% in 2009, while imports fell 26.5% during the year.
Exports account for nearly 45% of Canada’s Gross Domestic Product or GDP. The country is one of the few developed nations that is a net exporter of energy. Canada's major export partners are the United States, Japan, the United Kingdom, Germany, South Korea, the Netherlands, and China. The major items exported by Canada include
motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity and aluminum. Canada’s exports to the US declined by 33% in the year 2009.
Canada’s main imports partners are the United States, European Union, China and Mexico. This North American nation imports machinery, equipment, motor vehicles, parts, electronics, chemicals, electricity and durable consumer goods.
Canada Trade Relations with the US
Bilateral trade between Canada and the US incerased by 52% between 1989 (when the US-Canada Free Trade Agreement (FTA) came into effect) and 1994 (when the
North American Free Trade Agreement (NAFTA) was implemented). Although trade between the US and Canada has flourished since the signing of the NAFTA, some disputes related to intellectual property rights, softwood lumber, beef, tomatoes and other agricultural products do exist. While over 70% of Canada’s exports are to the US, around 50% of its imports come from the US.