Canadian trade with the United States

Canadian trade with the United States: Opposition to Free Trade

Canadian trade with the United States: Toward Free Trade

Canadian trade with the United States: Free Trade

United States Trade with Canada, 1985-2005, in Millions of Dollars

Significance: Canada is the most important trading partner of the United States and the major export market for thirty-five U.S. states. It is the United States’ largest market for food and also is a major market for manufactured goods. The United States imports more agricultural products from Canada than from any other nation and depends on it for forest products and energy.

Major trading between Canada and the United States began with the Canadian-American Reciprocity Treaty in 1854. Before this time, Great Britain had functioned as a ready market for Canadian grain and timber products. Britain’s Corn Laws, import tariffs that were created by the Importation Act of 1815, supported the import of grain (primarily wheat) grown in the British colonies rather than foreign-grown, often cheaper, grain. However, when Great Britain repealed its Corn Laws with the Importation Act of 1846, Canada needed to find new markets for its raw materials.

Aware that this act placed a serious hardship on Canada, Britain negotiated the Canadian-American Reciprocity Treaty (Elgin-Marcy Treaty) of 1854 with the United States to provide a market for Canadian raw materials, especially wheat and timber. In accepting the treaty, the United States agreed to eliminate its tariff of 21 percent on the import of raw materials. In exchange, the United States was granted fishing rights off Canada’s east coast. In addition, each country received some navigation rights on the other’s lakes and rivers.

The treaty resulted in rapid growth in Canada’s economy, as exports to the United States grew rapidly, eventually increasing by 33 percent. Exports from the United States to Canada, however, increased by only 7 percent. Trade between the two countries doubled by 1864. Then in 1866, the United States decided to end the treaty, citing three reasons. First, it seemed that only Canada was benefiting from the treaty. Second, the implementation of the Cayley-GaltTariff, enacted in 1858, imposed a tariff of 20 percent on manufactured goods and of 10 percent on partially manufactured goods imported into Canada. Third, the United States, angered by British aid to the Confederacy, saw the canceling of the treaty as a means of retaliation against Great Britain.

Further Reading

• Anastakis, Dimitry. Auto Pact: Creating a Borderless North American Auto Industry, 1960-1971.Toronto: University of Toronto Press, 2005. Views the Auto Pact as good for the Canadian economy, although it eliminated a Canadian automotive industry. Illustrations, bibliography, and appendixes. 
• Corsi, Jerome R. The Late Great U.S.A.: The Coming Merger with Mexico and Canada. Los Angeles: World Ahead Media, 2007. Sees NAFTA as leading to a North American community like the European Union and predicts dangers for the United States. Illustrations, foreword, and appendixes. 
• Hakim, Peter, and Robert E. Litan, eds. The Future of North American Integration: Beyond NAFTA. Washington, D.C.: Brookings Institution Press, 2002. Discusses the issue of how fully NAFTA addresses the relationship among the United States, Canada, and Mexico, and contains essays by experts from the countries. 
• Orchard, David. The Fight for Canada: Four Centuries of Resistance to American Expansion. Westmount, Que.: Robert Davies Multimedia, 1998. Discusses the history of opposition to free trade, U.S. investment in Canada, and the dangers of Canadian economic dependence on the United States.
• Thomas, David M., and Barbara Boyle Torrey, eds. Canada and the United States: Differences That Count. Peterborough, Ont.: Broadview Press, 2007. Gives insights into Canadian and American attitudes, and can be useful to understand the underlying cultural differences that cause problems in trading, especially free trade. 
• Thompson, John Herd, and Stephen J. Randall. Canada and the United States: Ambivalent Allies. Athens: University of Georgia Press, 2008. Covers Canadian-United States relations from the American Revolution to the present. 
• Weintraub, Sidney, ed. NAFTA’s Impact on North America: The First Decade. Washington, D.C.: Center for Strategic and International Studies, 2004. In depth, unbiased analysis of NAFTA and its effects. 

See also: Fishing industry; Forestry industry; Fur trapping and trading; General Agreement on Tariffs and Trade; International economics and trade; Mexican trade with the United States; multinational corporations; War of 1812.