Mr. Trump, you’re wrong. It’s actually Canada that subsidizes the United States of America.
This may come as a huge surprise for most Americans—but Canada subsidizes America. The good life that Americans enjoy is all subsidized by hard-working Canadians. Contrary to Trump’s false assertion, that American subsidizes Canada—the reality is, it is Canada which subsidizes America.
First, Canada gives America low-cost energy.
Canadian energy is highly essential for the United States, playing a crucial role in supporting U.S. energy security, economic growth, and energy dominance. Canada is the largest supplier of energy to the United States. In 2023, two-way energy trade reached a record total of $156 billion.
Canada supplies a significant portion of US crude oil imports.
In 2023, Canada provided 60 percent of US crude oil imports, which amounts to about 4 million barrels per day. In July 2024, the US imported a record high daily rate of 4.3 million barrels of oil, thanks to Canada tripling the capacity of the TMX pipeline. Nearly a quarter of U.S. oil refinery intake comes from Canada.
Next, Canada provides the majority, 99 percent, of US natural gas imports.
A significant amount of US electricity imports, 85 percent, come from Canada. Canadian electricity powers the equivalent of six million American homes. Canada supplies 27 percent of the uranium for US nuclear power. Canadian uranium presently powers the equivalent of almost twenty million homes in the United States. Canada is a major supplier of critical minerals to the US, including aluminum, iron, steel, copper, nickel, geranium, graphite, zinc, and more.
Over 35 major electricity transmission lines, and 70 oil and gas pipelines cross the shared border between the two countries. The deep integration of North American energy infrastructure would make diversifying away from Canada costly and time-consuming for America. The reliable and affordable energy from Canada not only powers American businesses but also helps reduce energy costs for American families.
Next, America imports a large number of services from Canada, particularly for tech companies like Amazon, Meta, Google, and Uber. In 2022, the U.S. reported a services trade surplus of $24.1 billion with Canada.
Next, Canadian investors have provided substantial low-interest loans to the US. Canadian investors made $700 billion worth of low-interest loans to the US. Low-interest loans from Canadian investors make borrowing cheaper for US businesses and consumers. This encourages increased spending and investment, as lower costs of financing lead to greater access to capital for expansion and operational improvements.
The influx of Canadian capital stimulates growth in the U.S. economy, by enabling companies to invest in new projects, hire more employees, and increase production capacity. This leads to a reduction in unemployment, and a boost in consumer confidence as businesses expand.
The availability of low-interest loans impacts the value of the U.S. dollar. As Canadian investments flow into the U.S., they contribute to a stronger dollar.
The ongoing provision of low-interest loans from Canada helps stabilize the US economy during periods of uncertainty or downturns, by providing necessary liquidity and encouraging investment in critical sectors.
Canadian investors’ low-interest loans play a crucial role in shaping the financial landscape of the US, driving growth through enhanced borrowing capacity.
So, when President Trump says that America is subsidizing Canada, is he trying to hide the fact that the truth is other way around. It is Canada, which is subsidizing the United States.
Without Canadian energy, services and low-interest loans, America would be in a sorry state.
Despite being a billionaire, Trump has a very shallow understanding of how the economy actually works.
Trump views trade as a zero-sum game, where a trade deficit signifies a loss for the U.S. However, trade deficits are a natural result of economic specialization and can be beneficial. For example, as noted, the US imports significant amounts of oil from Canada, which is then refined and used to fuel American industries, benefiting both countries.
Trump has repeatedly claimed that foreign countries, such as China, pay tariffs. In reality, tariffs are taxes on imports paid by U.S. businesses and consumers, leading to higher prices for American goods.
Trump’s tariffs have not reduced the US trade deficit with countries like China. Instead, they have led to retaliatory tariffs, hurting American farmers and manufacturers. The tariffs have also caused price increases and economic instability.
Trump aims to raise revenue through tariffs, while encouraging companies to return to the US. However, if companies relocate, there will be fewer imports and thus less tariff revenue.
Trump’s tariff policies have undermined his own economic agenda by contributing to higher prices, slower growth, and decreased consumer and business confidence.
Trump’s tariffs already have had a complex impact on the US economy, marked by both intended benefits and unintended consequences. While the aim was to revitalize US manufacturing and reduce trade deficits, the actual results show the opposite.
Economists broadly agree that Trump’s tariffs lead to higher prices and slower economic growth. The tariffs on China, Canada, and Mexico alone could decrease US GDP by about 0.4%, exceeding $100 billion.
Many businesses, especially manufacturers and retailers, have felt the repercussions of the tariffs. For example, Best Buy and Target reported facing increased costs and declining sales due to the tariffs. The auto industry may also face supply chain disruptions.
While some US steel producers may benefit from tariffs, supporting approximately 80,000 jobs, many more jobs (potentially 12 million) in industries that rely on steel and aluminum are threatened.
Soaring trade policy uncertainty has made US policy a leading source of risk, causing investors to question U.S. economic exceptionalism. Equity markets have dropped, and consumer and business confidence have plummeted.
Tariffs are contributing to elevated prices, with long-term inflation expectations spiking2. Major retailers are warning of higher prices ahead, which will disproportionately affect lower-income Americans.
Studies suggest that tariffs imposed during Trump’s initial term led to greater job losses in sectors burdened by increased duties than gains in those shielded by import fees.
While Trump claims that tariffs will ultimately make America wealthy again and restore its manufacturing greatness, experts are skeptical, pointing to the potential for job losses, higher prices, and overall economic disruption.
And when Canada shuts off the spigot, the US economy will face some very difficult ahead. The next four years will destroy a lot of lives financially.
