The US-Canada trade war is being felt on both sides of the border — what comes next?



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More than 40% of Canadian manufacturers weighing move to U.S., KPMG poll finds

Firms shifting toward ‘longer-term investment decisions’ as trade tensions persist, KPMG leader says
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The U.S. economy is roughly twelve times Canada’s. Bilateral goods-and-services trade was about $880 billion in 2025.

That is a large relationship, but it is a much bigger slice of Canada’s economy than of America’s.


Canada sends roughly 72–77% of its merchandise exports to the United States.

The U.S. sends a far smaller share of its total exports to Canada.

Exports to the U.S. are commonly cited as on the order of 15–20% of Canadian GDP in headline terms; value-added analyses put the truly exposed slice lower, but still material.

Any given tariff therefore hits a larger share of Canadian output and employment than of U.S. output.

  1. Economics is what decides a trade war. U.S. GDP is about twelve times Canada’s. The U.S. market absorbs most of what Canada sells. Canada cannot replace that demand. The U.S. can replace more of what it buys from Canada, even if some items (heavy crude, certain metals, some auto parts) are sticky and expensive to swap.
  2. Geography locks that in. Canada’s factories, pipelines, and rail lines were built to ship south. The shortest, cheapest route for oil, cars, lumber, and parts is the U.S. border. Oceans and other continents are farther and slower. The U.S. has other suppliers and two coasts. Canada’s alternatives are weaker and take years to build.
  3. Population matters only as market size and labor pool. 340 million vs. 41 million is why the U.S. market is the prize and why Canada cannot out-consume or out-produce its way out of a tariff fight.

So: all three point the same way. The binding constraint is economic scale plus a map that funnels Canada into the United States.


:rofl2:
 
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