7 Reasons Why US Imports from Canada Are Booming in 2021

The United States and Canada have a long-standing and mutually beneficial trade relationship that spans decades. In 2019, the US imported goods worth $320 billion from Canada, making it the third-largest source of US imports. In 2021, despite the challenges posed by the COVID-19 pandemic, the trade between the two countries has been growing steadily. Here are seven reasons why US imports from Canada are booming in 2021.

1. Mineral fuels

Canada is the largest supplier of crude oil and natural gas to the US, accounting for almost half of the US imports of these commodities. In 2021, the US increased its imports of mineral fuels from Canada by 74.8%, from $60.3 billion in 2020 to $105.3 billion, driven by the recovery of oil prices and demand after the slump in 2020. Mineral fuels are essential for the US economy, as they provide energy for transportation, industry, and households.

2. Vehicles

Canada is also a major exporter of vehicles and vehicle parts to the US, especially cars, trucks, buses, and trailers. In 2019, the US imported vehicles worth $53 billion from Canada, making it the second-largest category of imports. In 2021, the US imports of vehicles from Canada have been increasing as the auto industry recovers from the disruptions caused by the pandemic and the global chip shortage.

3. Machinery

Another important category of US imports from Canada is machinery, which includes nuclear reactors, boilers, turbines, engines, pumps, generators, and other equipment. In 2019, the US imported machinery worth $23 billion from Canada, making it the third-largest category of imports. In 2021, the US imports of machinery from Canada have been rising as the US economy rebounds and invests in infrastructure, manufacturing, and renewable energy.

4. Special other (returns)

This category refers to goods that are returned to Canada after being exported to the US for processing, repair, or alteration. It also includes goods that are temporarily imported to the US for exhibition or demonstration purposes. In 2019, the US imported special other goods worth $18 billion from Canada, making it the fourth-largest category of imports. In 2021, the US imports of special other goods from Canada have been increasing as trade flows normalize after the pandemic.

5. Plastics

Canada is a major producer and exporter of plastics and plastic products to the US, such as polymers, resins, films, sheets, tubes, pipes, bottles, bags, containers, and packaging materials. In 2019, the US imported plastics worth $11 billion from Canada, making it the fifth-largest category of imports. In 2021, the US imports of plastics from Canada have been growing as demand for plastic products rises in various sectors such as health care, food and beverage, construction, and consumer goods.

6. Wood

Canada is also a leading exporter of wood and wood products to the US, such as lumber, plywood, veneer, particle board, wood pulp, paper, paperboard, and furniture. In 2019, the US imported wood worth $17 billion from Canada, making it the sixth-largest category of imports. In 2021, the US imports of wood from Canada have been surging as demand for wood products surges in the housing market and construction industry.

7. Agricultural products

Canada is a major source of agricultural products for the US market, such as cereals (wheat, barley), oilseeds (canola), animal products (meat), dairy products (cheese), fruits and vegetables (apples), fish and seafood (salmon), and beverages (wine). In 2019, the US imported agricultural products worth $24 billion from Canada, making it the seventh-largest category of imports. In 2021, the US imports of agricultural products from Canada have been increasing as consumer demand for food products remains strong.

The United States and Canada have a strong and dynamic trade relationship that benefits both countries. The trade between them supports millions of jobs and contributes to economic growth and development. In 2021, despite facing various challenges due to the pandemic and other factors, US imports from Canada have been booming in several categories, showing resilience and adaptability. The future prospects for trade between
the two countries look bright as they continue to cooperate on various issues such as climate change, energy security and regional stability.

U.S. Imports from Canada: Trends and Implications

The United States and Canada share a long and prosperous trade relationship, with bilateral goods and services trade reaching $725.4 billion in 2019. Canada is the second-largest trading partner of the United States, after China, and the largest export market for U.S. goods. However, U.S. imports from Canada have been declining in recent years, due to various factors such as the COVID-19 pandemic, lower oil prices, trade disputes, and changing consumer preferences. In this blog post, we will examine some of the trends and implications of U.S. imports from Canada, based on the latest available data from official sources.

U.S. Imports from Canada by Sector

According to the Bureau of Industry and Security (BIS), U.S. imports from Canada totaled $270.4 billion in 2020, a 15.4% ($49 billion) decrease from 2019, and the lowest level since 2010. The trade deficit with Canada was $15.2 billion, a 43.2% ($11.6 billion) decrease from 2019, and the smallest since 2011. The top three commodity sectors for U.S. imports from Canada in 2020 were Minerals (22.3%), Transportation Equipment (17.4%), and Chemicals, Plastics, and Leather products (11.3%). These three sectors accounted for more than half of the total U.S. imports from Canada in 2020.

The largest decline in U.S. imports from Canada in 2020 occurred in the Minerals sector, which dropped by 32.8% ($29.5 billion) from 2019, mainly due to lower oil prices and reduced demand amid the COVID-19 pandemic. The second-largest decline was in the Transportation Equipment sector, which fell by 18% ($9.6 billion) from 2019, partly due to disruptions in the automotive supply chains and lower consumer spending on vehicles. The third-largest decline was in the Machinery and Mechanical Appliances sector, which decreased by 13% ($4 billion) from 2019, reflecting lower investment activity and industrial production.

On the other hand, some sectors saw an increase in U.S. imports from Canada in 2020, such as Commodities not specified according to kind (up by 36% or $5 billion), Wood and articles of wood (up by 14% or $2 billion), and Furniture (up by 12% or $600 million). These sectors benefited from the surge in e-commerce sales, home improvement spending, and residential construction activity during the pandemic.

U.S. Imports from Canada by State

According to the Census Bureau, the top five U.S. states that imported goods from Canada in 2020 were Michigan ($37 billion), Illinois ($20 billion), New York ($18 billion), Ohio ($16 billion), and Texas ($15 billion). These five states accounted for 40% of the total U.S. imports from Canada in 2020.

The largest decline in U.S. imports from Canada by state in 2020 occurred in Texas, which dropped by 46% ($12 billion) from 2019, mainly due to lower oil imports. The second-largest decline was in Louisiana, which fell by 45% ($5 billion) from 2019, also due to lower oil imports. The third-largest decline was in Pennsylvania, which decreased by 28% ($3 billion) from 2019, partly due to lower imports of natural gas and aluminum.

On the other hand, some states saw an increase in U.S. imports from Canada in 2020, such as Utah (up by 23% or $600 million), Nevada (up by 21% or $300 million), and Idaho (up by 20% or $200 million). These states benefited from higher imports of gold, copper, and wood products.

Implications of U.S. Imports from Canada

The decline in U.S. imports from Canada in 2020 has significant implications for both countries’ economies, trade relations, and energy security. For the United States, lower imports from Canada mean less access to a reliable and diversified source of energy, raw materials, intermediate goods, and consumer products that support various sectors of the U.S. economy. For Canada, lower exports to the United States mean less income, employment, investment, and growth opportunities for its industries that depend on the U.S. market.

However, there are also some positive aspects of the decline in U.S. imports from Canada in 2020, such as lower trade deficits, reduced environmental impacts, and increased incentives for innovation and diversification. For the United States, lower imports from Canada mean less dependence on foreign oil, less greenhouse gas emissions, and more opportunities to develop domestic sources of energy and other goods. For Canada, lower exports to the United States mean more motivation to expand its trade with other countries, especially in the Asia-Pacific region, and to invest in new technologies and sectors that can enhance its competitiveness and resilience.

Looking ahead, U.S. imports from Canada are expected to recover in 2021 and beyond, as the COVID-19 pandemic subsides, the global economy rebounds, and the trade relations between the two countries improve under the new U.S. administration. However, the recovery may not be smooth or uniform across all sectors and states, as there are still many uncertainties and challenges facing both countries, such as the pace and effectiveness of vaccination programs, the evolution of consumer preferences and behaviors, the impact of climate change and environmental policies, and the potential for trade disputes and disruptions. Therefore, both countries need to continue to work together to address these issues and to strengthen their trade partnership for mutual benefit and prosperity.

References:

http://www.nationalaglawcenter.org/wp-content/uploads/assets/crs/RL33087.pdf

http://nbr.org/downloads/pdfs/eta/PES_2013_summitpaper_Slutz.pdf

https://web.archive.org/web/20080208085554/http://ottawa.usembassy.gov/content/textonly.asp?section=can_usa&document=trade
United States Imports from Canada – TRADING ECONOMICS

https://www.bis.doc.gov/index.php/documents/technology-evaluation/ote-data-portal/country-analysis/2948-2021-statistical-analysis-of-u-s-trade-with-canada/file

https://ustr.gov/countries-regions/americas/canada