One chart shows why Trump's trade fight with Canada and Mexico is misguided

One chart shows why Trump's trade fight with Canada and Mexico is misguided

trudeau trump

Jonathan Ernst/Reuters

Canadian Prime Minster Justin Trudeau and US President Donald Trump

  • President Donald Trump's recent trade actions have stepped up pressure on Canada and Mexico, two close US allies.
  • Trump's focus for his broader trade agenda is to reduce US trade deficits with various countries.
  • But Canada and Mexico make up a tiny part of the overall US trade deficit.
  • In fact, the US maintains a trade surplus with Canada.

President Donald Trump's hostility toward Canada and Mexico is unlikely to help the president achieve the primary goal of his recent trade actions.

In recent weeks, Trump has ramped up tension with the US's North American neighbors, with the goal of shifting the trade balances between the countries.

On Thursday, Trump announced the US would impose tariffs on imports of steel and aluminum from Canada, Mexico, and the European Union in an attempt to reduce trade imbalances with the three key allies. Trump also launched an investigation that could result in similar restrictions on imported autos - a cornerstone of trade between the US, Canada, and Mexico.

In addition to the tariffs, Trump's hard line in the renegotiation of the North American Free Trade Agreement, or NAFTA, has left the future of that deal in doubt.


Trump says all of the actions are designed to bring down the trade deficit between the US and other countries.

Economists are skeptical that President Donald Trump's intense focus on reducing the US trade deficit is a good idea. But merits aside, it appears that the president may be missing the mark with his most recent trade moves.

According to Bank of America Merrill Lynch, the percentage of the total US trade deficit attributable to Canada and Mexico is under 10%. In fact, since NAFTA's implementation in 1994, the trade deficit with America's neighbors has only increased moderately, while the broader deficit ballooned.

us trade balance world v nafta

Bank of America Merrill Lynch


In fact, the US ran a trade surplus with Canada of $8.4 billion in 2017, according to the US Trade Representative's office. Even pro-Trump economists and Republican members of Congress have suggested that the focus on US allies is misguided and the president should be using trade pressure on countries like China.

"This is dumb," GOP Sen. Ben Sasse said last week. "Europe, Canada, and Mexico are not China, and you don't treat allies the same way you treat opponents."