Apr 25, 2026
U.S. Commerce Secretary Howard Lutnick isn't ready to offer an olive branch, much less an apology, to Canada for the Trump administration's rhetoric. Testifying Wednesday on international trade and economic growth before the Senate Appropriations Committee, Lutnick did not back down from recent criticisms of Canada's trade strategy.
Asked by Sen Jeanne Shaheen (D-New Hampshire) how "insulting our closest ally and neighbor" helps companies who have suffered because of the loss of Canadian business and tourism, Lutnick doubled down (1), saying "Canada's economy leans on the incredible $30 trillion economy of America" and complained about Canada not putting U.S. spirits on their shelves.
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That came just days after Lutnick said "they suck" (2) when asked about Canada's negotiation strategy. The U.S. Department of Commerce later said that comment referred to the trade imbalance between the two countries.
The inflammatory comments, understandably, angered many Canadians. But when it comes to the topic of Canada's economic dependence on the U.S., he's not entirely wrong.
Half of Canada's economy is built on trade with U.S.
When U.S. President Ronald Reagan and Canadian Prime Minister Brian Mulroney signed a free trade deal in January 1988, it did away with tariffs on goods that crossed the U.S./Canada border. At the time, 75% of Canadian exports went to the U.S. Today, it's 80% — and trade has grown to make up two-thirds (3) of the Canadian economy, with half of that coming from the U.S.
America, meanwhile, sees just 3% of its economy coming from Canada-U.S. trade.
Canada, technically, could export its products to other nations, but right now, the country doesn't have the rail or port capacity to match what it sends to the U.S. American ports handle 2.3 billion (4) tons of freight each year. Canadian ports handle around 351 million (5).
Canada sends 4 million barrels of crude oil to the U.S each day, but doesn't have the infrastructure or pipelines to send them elsewhere.
Supply chains, meanwhile, are intertwined in a manner resembling a Gordian knot. Vehicle parts cross the border multiple times at different stages of construction, making it difficult to reduce Canada's dependency on the U.S. when it comes to the auto industry.
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Overall, the U.S. is responsible for 45% (6) of the foreign direct investment into Canada. That's less than the 61% it used to be, but still a commanding amount.
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Trade winds chilling, but slow to shift
Canada, of course, can build out additional port capacity and construct east-west pipelines. And it can look for new trade partners. But doing all of that takes both a lot of time and a lot of money.
Some parties think the better course of action is to wait out the two remaining years of the Trump administration and see if things go back to normal with whoever next occupies the Oval Office. In the meantime, though, it's likely going to remain challenging to get a bottle of Kentucky bourbon in Canada and the war of words is unlikely to find any sort of détente.
But while Canada might be dependent on the U.S. economy, there are several areas of the U.S. that rely heavily on Canadian spending, including tourism in border towns and cities with major attractions. And while Canadians are canceling trips to the U.S., Americans who aren't buying into the rhetoric are coming to see their Northern neighbors.
Between 2024 and 2025, U.S. visits to Canada increased by 10% (7). Early data indicates that number could increase to 26% in 2026.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
X (1); CBC (2); Macrotrends (3); NOAA (4); Transport Canada (5); Scotiabank (6); Yahoo Travel (7)
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Chris Morris is a veteran journalist with more than 35 years of experience, the majority of which were spent with some of the Internet’s biggest sites, including CNNMoney.com, where he was director of content development, and Yahoo! Finance, where he was managing editor. His work has also appeared on Fortune, Fast Company, Inc., CNBC.com, AARP, Nasdaq.com, and Voice of America, as well as dozens of other national publications.
