Since President Donald Trump returned to power for his second term in 2025, the political relationship between America and Canada has widely deteriorated. Disputes have included trade disagreements, environmental concerns, uncertainty over oil exports, illegal immigration, terrorism threats, and illegal claims of drug trafficking.
On April 2, 2025, Trump unveiled an extensive list of tariffs towards various countries across the globe. From taxes starting at 10% to taxes as high as 50%, the tax bracket differed for all.
Canada was not included in the tariff list, but the neighboring country was already dealing with an additional 25% tariff on all its imports except oil and energy, which were capped at 10%.
By July 2025, the U.S. raised tariffs on Canada to 35%, but Canada immediately retaliated with reciprocal tariffs, which include 25% tariffs on U.S. cars & trucks alongside other goods.
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Meanwhile, Donald Trump has repeatedly claimed that the United States “subsidizes” Canada, suggesting the economic relationship has largely benefited Canada. However, trade data and expert analysis suggest that the truth has a vast difference. His claims are based on the U.S. trade deficit with Canada.
In December 2024, POTUS claimed the U.S. was subsidizing Canada by roughly $100 billion a year, a figure he later increased to $200 billion during remarks at the World Economic Forum, which was held in Davos from 19th to 23rd January, 2025.
According to CNBC, during his more than hour-long special address, which was an alleged attempt to clarify his stance on the administration’s recent decisions, Trump blamed Canada for taking advantage of America in an “unfair manner.”
“Canada lives because of the United States,” Trump said, later revoking Carney’s invitation to join his proposed Gaza “Board of Peace.” While Trump has repeated those numbers since taking office. But economists say a trade deficit is not the same as a subsidy.
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According to sources, while America does run a trade deficit with Canada, that imbalance does not indicate the U.S. is being taken advantage of. However, experts note that trade deficits often reflect strong domestic demand and economic performance rather than economic weakness. In addition, economists also point out that Donald Trump tends to view trade as a zero-sum equation.
“I think that in Trump’s mind, he sees trade as a zero-sum game,” Concordia University economics professor Moshe Lander told CBC News. “He hears the word ‘deficit,’ and that’s the end of the math.”
Similarly, economists Marc Ercolao and Andrew Foran wrote in a January 21 report that the U.S. trade deficit with Canada is “not a subsidy, but a by-product of U.S. economic outperformance relative to other countries.”
In 2024, total U.S.–Canada goods trade reached approximately $762.1 billion, according to the Office of the United States Trade Representative. Moreover, the U.S. also imported $412.7 billion in goods from Canada, while exporting $349.4 billion, resulting in a trade deficit of about $63.3 billion.
The numbers happen to be far less than what Donald Trump claimed. Ercolao and Foran noted that nearly the entire U.S. trade deficit with Canada is driven by energy imports. When Canadian energy exports are excluded, the trade balance reverses, leaving the U.S. with an extra amount of C$60 billion (about US$45 billion).
Mr Wonderful: The Market Believes Canada, U.S. Must Unite Economically@kevinolearytv: “The market believes that these two countries have to unite one way of the other economically.” pic.twitter.com/rAtLOqiVev
— Mr Producer (@RichSementa) January 26, 2026
In his highly publicized speech, Trump made fun of wind energy, calling windmills “losers” and claiming that countries with more wind power have an negetive economic impact. This is not the first time that the 79-year-old has stated vague and unverified numbers, previously he has been called out for stating unverified facts in several speeches.
Disclaimer: The article mentions facts, figures and numbers from secondary sources. Inquistr does not hold any responsibility for them.
