Trump claims the trade deficit with Canada is a $200B subsidy. Experts disagree

U.S. President Donald Trump’s claim that his country subsidizes Canada with hundreds of billions of dollars every year has sparked a heated debate. The President has used this argument as a key point in his push for annexing Canada. However, experts are questioning the validity of his numbers and whether the U.S. is truly providing a subsidy to Canada.

Trump’s claim of a subsidy has varied over time, ranging from $100 billion to $250 billion. However, economists argue that the U.S. trade deficit with Canada should not be viewed as a subsidy. Moshe Lander, an economics professor at Concordia University, explains that in order for it to be considered a subsidy, Canada would have to sell its goods to the U.S. at a higher price than they are worth, which is not the case.

University of Toronto economist Joseph Steinberg adds that a trade deficit can actually benefit the economy of the country with the deficit, as it allows for more capital to flow in than out. The U.S. is a top destination for foreign direct investment, which strengthens its economy.

When looking at the actual numbers, the U.S. has a trade deficit of $63 billion with Canada, which is just over five percent of its global trade deficit with all countries. This deficit is a small fraction of the U.S.’s annual GDP, making it insignificant in the grand scheme of things.

Energy exports, such as oil, natural gas, and electricity, make up about a third of Canada’s exports to the U.S. Without energy exports, Canada actually has a trade deficit with the U.S. However, the U.S. benefits from these energy imports as they are cheaper than what they could get from other countries.

Overall, while Trump’s claims of a subsidy may be politically motivated, economists argue that the trade relationship between the U.S. and Canada is mutually beneficial. The U.S. benefits from Canada’s exports, while Canada benefits from the U.S.’s imports. It is a complex relationship that should not be oversimplified into a mere subsidy.