5 Reasons Why Canada Imports So Much
Canada is one of the world’s largest economies, with a gross domestic product (GDP) of over 2 trillion Canadian dollars in 2022. It is also a major trading nation, exporting and importing goods and services worth hundreds of billions of dollars every year. But what are the main products that Canada imports, and why does it need them so much? Here are five reasons why Canada imports so much, based on the latest data from the Observatory of Economic Complexity (OEC).
1. Canada imports cars and car parts to meet its domestic demand.
Cars are the top import product of Canada, accounting for 5.8% of its total imports in 2022, or 27.2 billion US dollars. Canada also imports motor vehicles parts and accessories worth 14.5 billion US dollars, or 3.1% of its total imports. These products mainly come from the United States, which supplies 58.6% of Canada’s car imports and 64.4% of its car parts imports. Other major sources of these products are Mexico, Germany, Japan, and South Korea.
Canada imports cars and car parts because it has a large domestic demand for them, driven by its population of 38.7 million people and its vast territory that requires transportation. Canada also has a strong automotive industry that produces cars and car parts for both domestic and foreign markets, but it cannot meet all of its own needs. Therefore, Canada relies on imports to complement its domestic production and consumption.
2. Canada imports crude oil and refined petroleum to fuel its economy.
Crude oil and refined petroleum are the fourth and fifth most imported products of Canada, respectively. Canada imported crude oil worth 11.9 billion US dollars, or 2.6% of its total imports, and refined petroleum worth 12.5 billion US dollars, or 2.7% of its total imports, in 2022. These products mainly come from the United States, which supplies 76.4% of Canada’s crude oil imports and 54% of its refined petroleum imports. Other major sources of these products are Norway, Saudi Arabia, Algeria, and Iraq.
Canada imports crude oil and refined petroleum because it needs them to fuel its economy, especially its energy-intensive industries such as mining, manufacturing, transportation, and electricity generation. Canada is also a major exporter of crude oil and refined petroleum, ranking as the fourth-largest exporter of both products in the world in 2022. However, Canada’s oil production is concentrated in the western provinces of Alberta and Saskatchewan, while its oil consumption is spread across the country. Therefore, Canada imports oil from other countries to supply its eastern provinces and to diversify its sources of energy.
3. Canada imports plastics and plastic articles to support its manufacturing sector.
Plastics and plastic articles are the sixth most imported product of Canada, accounting for 4% of its total imports in 2022, or 22.5 billion US dollars. These products mainly come from the United States, which supplies 61% of Canada’s plastics and plastic articles imports. Other major sources of these products are China, Mexico, Germany, and Taiwan.
Canada imports plastics and plastic articles because it needs them to support its manufacturing sector, which uses plastics as raw materials or inputs for various products such as packaging, furniture, appliances, electronics, medical devices, and vehicles. Plastics are also used for consumer goods such as toys, clothing, footwear, and household items. Canada produces some plastics domestically, but it cannot meet all of its demand for these versatile materials.
4. Canada imports pharmaceuticals to ensure its public health.
Pharmaceuticals are the seventh most imported product of Canada, accounting for 3.5% of its total imports in 2022, or 20 billion US dollars. These products mainly come from the United States, which supplies 40% of Canada’s pharmaceuticals imports. Other major sources of these products are Switzerland, Ireland, Germany, and France.
Canada imports pharmaceuticals because it needs them to ensure its public health, especially in times of pandemics or emergencies. Pharmaceuticals include drugs, vaccines, biologics, medical devices, and diagnostic kits that are used to prevent, treat, or cure diseases or conditions affecting humans or animals. Canada has a universal health care system that covers most of the costs of these products for its citizens. However, Canada does not produce enough pharmaceuticals domestically to meet its own needs or to export to other countries.
5. Canada imports gems and precious metals to adorn its people and economy.
Gems and precious metals are the eighth most imported product of Canada, accounting for 3.3% of its total imports in 2022,
or 19 billion US dollars. These products mainly come from the United States,
which supplies 46% of Canada’s gems and precious metals imports.
Other major sources of these products are India, China, United Kingdom, and Switzerland.
Canada imports gems and precious metals because it needs them to adorn its people and economy. Gems and precious metals include diamonds, gold, silver, platinum, palladium, and other precious stones and metals that are used for jewelry, investment, industrial, or artistic purposes. Canada is also a major exporter of gems and precious metals, ranking as the third-largest exporter of gold and the fifth-largest exporter of diamonds in the world in 2022. However, Canada’s production of these products is not enough to satisfy its domestic demand or to diversify its sources of wealth.
Canada’s Top Imports: Trends and Implications
Canada is one of the world’s largest economies, with a gross domestic product (GDP) of $1.7 trillion in 2020. The country relies heavily on trade, as its exports and imports accounted for 64.9% and 67.8% of its GDP respectively. In this blog post, we will examine the top five imports of Canada in 2020, their trends over time, and their implications for the Canadian economy and society.
Cars
Cars were the most imported product category by Canada in 2020, with a value of $27.2 billion, representing 6.7% of its total imports. The main sources of cars for Canada were the United States ($11.2 billion), Japan ($4.6 billion), Germany ($3.9 billion), Mexico ($3.5 billion), and South Korea ($1.8 billion). Cars have been consistently among the top imports of Canada since 2000, although their share has declined from 10.4% in 2000 to 6.7% in 2020. The main reason for this decline is the increased production of cars within Canada, especially by foreign automakers such as Toyota, Honda, and Hyundai, who have established plants in Ontario and Quebec. The import of cars also reflects the high demand for personal vehicles in Canada, as well as the preference for foreign brands over domestic ones.
Motor Vehicles; Parts and Accessories
The second most imported product category by Canada in 2020 was motor vehicles; parts and accessories, with a value of $14.5 billion, representing 3.6% of its total imports. The main sources of these products for Canada were the United States ($8.9 billion), Mexico ($2 billion), China ($1 billion), Germany ($0.8 billion), and Japan ($0.7 billion). Motor vehicles; parts and accessories have also been among the top imports of Canada since 2000, although their share has increased from 2.9% in 2000 to 3.6% in 2020. The main reason for this increase is the integration of the North American automotive industry under the North American Free Trade Agreement (NAFTA) and its successor, the United States-Mexico-Canada Agreement (USMCA), which have facilitated the cross-border trade of vehicles and parts among the three countries. The import of these products also reflects the dependence of the Canadian automotive sector on foreign inputs, as well as the competitiveness of foreign suppliers.
Delivery Trucks
The third most imported product category by Canada in 2020 was delivery trucks, with a value of $14.2 billion, representing 3.5% of its total imports. The main sources of delivery trucks for Canada were the United States ($11 billion), Mexico ($1.9 billion), Japan ($0.5 billion), Germany ($0.4 billion), and China ($0.2 billion). Delivery trucks have also been among the top imports of Canada since 2000, although their share has increased from 2% in 2000 to 3.5% in 2020. The main reason for this increase is the growth of e-commerce and online shopping in Canada, which have boosted the demand for delivery services and vehicles. The import of delivery trucks also reflects the specialization of the Canadian automotive sector in passenger cars rather than commercial vehicles, as well as the dominance of foreign brands such as Ford, Chevrolet, and Toyota.
Refined Petroleum
The fourth most imported product category by Canada in 2020 was refined petroleum, with a value of $12.5 billion, representing 3.1% of its total imports. The main sources of refined petroleum for Canada were the United States ($10 billion), Algeria ($1 billion), Norway ($0.4 billion), Saudi Arabia ($0.4 billion), and Russia ($0.3 billion). Refined petroleum has also been among the top imports of Canada since 2000, although its share has fluctuated from 2% to 5% over time depending on oil prices and domestic production levels. The main reason for this import is the mismatch between the supply and demand of refined petroleum products in Canada, as the country produces more heavy crude oil than it can refine domestically, while it consumes more light refined products than it can produce domestically.
Crude Petroleum
The fifth most imported product category by Canada in 2020 was crude petroleum, with a value of $11.9 billion, representing 2.9% of its total imports.
The main sources of crude petroleum for Canada were Norway ($3 billion), Nigeria ($2 billion), Saudi Arabia ($1.8 billion), United States ($1.7 billion), and Algeria ($1 billion). Crude petroleum has also been among the top imports of Canada since 2000, although its share has declined from 5.4% in 2000 to 2.9% in 2020. The main reason for this decline is the increased production of crude oil in Canada, especially from the oil sands in Alberta, which have made the country a net exporter of crude oil since 2004. The import of crude petroleum also reflects the regional disparities in oil production and consumption in Canada, as the eastern provinces rely more on imported oil than the western provinces.
Implications
The analysis of the top five imports of Canada in 2020 reveals some important insights into the Canadian economy and society. First, it shows that Canada is highly integrated with its main trading partner, the United States, as well as with other major economies such as China, Mexico, Germany, and Japan. Second, it shows that Canada is a major player in the global energy market, as it imports and exports significant amounts of oil and gas products. Third, it shows that Canada has a diversified and competitive automotive sector, which produces and consumes a variety of vehicles and parts. Fourth, it shows that Canada has a strong demand for consumer goods and services, which drives the import of cars, delivery trucks, and other products. Fifth, it shows that Canada faces some challenges and opportunities in terms of its energy security, environmental sustainability, and regional development.
References:
http://www.bankofcanada.ca/wp-content/uploads/2015/07/mpr-2015-07-15.pdf
http://www.bankofcanada.ca/wp-content/uploads/2010/11/inflation_control_target.pdf
https://web.archive.org/web/20100912120201/http://www.investinontario.com/siteselector/coca_401.asp
http://stats.oecd.org/Index.aspx?DataSetCode=TRADEINDMACRO
https://www.international.gc.ca/economist-economiste/statistics-statistiques/annual_merchandise_trade-commerce_des_marchandises_annuel.aspx?lang=eng
https://www.worldstopexports.com/canadas-top-10-imports/
https://oec.world/en/profile/country/can/
https://ruggedthuglife.com/canada/what-are-canadas-top-6-imports/
https://ruggedthuglife.com/canada/what-are-canadas-top-five-exports/
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