When Donald Trump considered using “economic force” to potentially acquire Canada, the president-elect of the United States was, at the same time, denying the importance of his country’s first trading partner.
“We don’t need anything they have,” Trump said of Canada, during a news conference at his Mar-a-Lago estate in Florida earlier this week.
He dismissed any U.S. reliance on trade with its northern neighbor, seemingly ignoring that Canadian exports to the United States in 2023, for example, totaled nearly US$418.6 billion, according to the US Census Bureau.
Nor did Trump mention the approximately 4.4 million barrels of oil the United States receives each day from Canada, according to the U.S. Energy Information Administration, or a little more than half of all imported oil and their first import.
He focused on the automotive, lumber and dairy sectors, saying the United States could meet significant American demand for these products.
But as the numbers and experts suggest, American demand means Canada may not be so easily replaced.
Automotive
Trump told reporters that in reference to Canada, the United States did not need “their cars” and that he preferred to make them in Detroit.
Although Canada does not manufacture any of its own vehicles for mass production, it is home to factories for American automakers Ford, General Motors and Stellantis North America.
Because of its large appetite for vehicles, the United States is the world’s largest importer of automobiles – and Canada is one of its largest suppliers. For example, more than 1.5 million vehicles were produced in Canada in 2023, according to the Canadian Vehicle Manufacturers’ Association.
In a normal year, according to Flavio Volpe, president of the Automotive Parts Manufacturers Association, about 80 percent of vehicles manufactured in Canada are exported to the United States.
So could American automakers, as Trump suggests, pull all their factories out of Canada, set up shop in their country and produce all their vehicles from home?
“Absolutely,” said Dimitry Anastakis, a professor of business history at the University of Toronto’s Rotman School of Management and an auto industry expert.
But there would be a major pitfall: the disintegration of the North American auto industry, he said.
“It could help Americans and American producers, but the cost of doing so would be so enormous that it would likely plunge the North American industry into a recession,” he said. “These are supply chains that have been developing for decades.”
U.S. automakers are building factories in Canada to take advantage of lower wages, lower exchange rates and a skilled workforce. While moving all Canadian factories to the United States would be a boon for labor in that country, it would also mean a dramatic increase in costs for vehicle consumers on both sides of the border, said Anastakis.
This week, U.S. President-elect Donald Trump said the U.S. doesn’t need Canada’s auto industry as he threatened to use “economic force” to make Canada a state and impose customs duties of 25% on Canadian products. But is all this talk? CBC’s Jennifer La Grassa speaks with Dimitry Anastakis, a business professor at the University of Toronto, and Peter Frise, a professor of automotive engineering at the University of Windsor.
It would take years to reshape their supply chains and would cost U.S. manufacturers dearly, he said, because they have invested so much money in their operations in Canada.
“This point of discussion which [Trump] ‘We could build them all here,’ like snapping your fingers, is completely out of touch with reality because of the way the industry has evolved over the last 60 years,” Anastakis said.
Volpe said U.S. manufacturers would suffer heavy losses by moving and building new factories in the United States, which would take years. “Creating an us versus them context is pure fabrication,” he said.
Saw timber
According to the Washington, D.C.-based National Association of Home Builders, U.S. domestic production of softwood lumber is not enough to meet the demand of the homebuilding industry.
“To fill this gap, the United States relies on softwood lumber from Canada to meet our demand for lumber,” said the group’s president and CEO, Jim Tobin, in a statement by email to CBC News.
The United States uses a lot of lumber, and a significant portion comes from Canada.
“The United States imports about 25 percent of Canada’s total softwood lumber consumption, which is quite a large market share,” said Rajan Parajuli, associate professor of forest economics and policy at the NC State University in Raleigh, North Carolina, in an email. to CBC News.
Parajuli said the United States does not have the capacity to meet domestic demand.
But Trump said the United States did not need Canadian lumber and had “huge fields of timber” that he could lift any restrictions through an executive order.
However, Parajuli said it would still be “highly unlikely” that the United States, without Canadian lumber, would be able to meet demand. Even though the United States has a sufficient inventory of standing trees, the sawmill industry has limited capacity and a limited supply chain, he said.
Above all, the forestry industry has seen a decline over the past two decades, he said.
Russ Taylor, a British Columbia-based forestry consultant, said Trump could ease regulations to allow more logging in U.S. public forests, but that would require more loggers, truck drivers and workers.
“Where will the labor, skilled workers and capital come from? It doesn’t happen overnight.”
President-elect Donald Trump again laid out his problems with Canada on Tuesday, citing concerns about the Canadian military and saying the United States is subsidizing the Canadian economy. He ruled out using military force against Canada, saying he would rely on “economic force” upon his return to the Oval Office.
Taylor said Trump was also forgetting the processing aspect of the industry and that factories in the United States are already operating at about 85 percent capacity.
“You could probably get more logs to American sawmills, but you wouldn’t make much, you’d make a little,” he said.
But with about 25 percent of lumber coming from Canada, a 5 or 10 percent increase in production in the United States means “you’re still not close” to meeting demand, Taylor said. .
“At the end of the day, the United States needs Canadian lumber, period.”
Milkman
In 2023, Canada exported approximately C$488 million worth of dairy products to the United States, according to Agriculture and Agri-Food Canada.
But Trump said the United States doesn’t need Canadian dairy products, specifically mentioning Canadian milk. And it’s true that Canada doesn’t export much milk to the United States – worth about $17 million in 2023.
But there is a market for Canadian cheese, said Andrea Berti, president of the U.S.-based Cheese Importers Association of America.
Berti said the United States imports a lot of sheep’s and goat’s milk cheeses made in Canada, products that are not very common in the United States because it tends to focus more on cheeses made from sheep and goat’s milk. cow’s milk base.
“Goat’s milk is also produced in the United States, but its percentage is lower. It is not enough to cover American demand,” he said. “That’s why we’re going to Canada.”
Berti said Americans also look to Canada for French-style cheeses, as well as artisanal cheeses made in Quebec, which are popular in specialty stores.
Donald Trump has repeatedly claimed that the United States “subsidizes” Canada “to the tune of $100 billion.” Where does this number come from? And does Canada really benefit from the advantages of the United States? Andrew Chang digs into the math, money and politics of Canada-U.S. trade relations to find out how much – if any – of what Trump says is actually true. Images collected from Reuters, Getty Images and The Canadian Press.
