| Maine | 41% |
| Michigan | 39% |
| Wisconsin | 31% |
* * U.S. Commerce Department, TradeStats Express database
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The Canadian government’s good-neighbor response to last year’s California wildfire crisis:
Canada’s support during the California fires was the normal pattern of northern-border life for the past century, not an anomaly. Here’s then-President Reagan signing the U.S.-Canada Free Trade Agreement in 1988:
“Let the 5,000-mile border between Canada and the United States stand as a symbol for the future. No soldier stands guard to protect it. Barbed wire does not deface it. And no invisible barrier of economic suspicion and fear will extend it. Let it forever be not a point of division but a meeting place between great and true friends.”
In pretty sharp contrast to both Canada’s 2025 fire relief mission and Reagan’s vision of North American community, White House lawyers last week “operationalized” Mr. Trump’s bizarre response to Ontario’s summer fire misfortune — a threat to impose tariffs after smoke drifted south across the border — by exhuming a 1930 trade law (“Section 338”) and using it to threaten 50% tariffs on about $20 billion worth of Canadian-made goods. (Cars, liquor, wood products, motorcycles, hockey and gymnastics equipment, etc.) Reframed by White House lawyers and trade officials as a response to supposed Canadian “discrimination” against American products, and then quietly pitched to reporters as a “negotiating leverage” gambit, this will supposedly go into effect around Labor Day. Given these claims of “discrimination”, here’s a look at Canada as a U.S. customer:
Policy: Canadian trade policy is in a sense “discriminatory,” but mostly in favor of American goods. Per the WTO’s “World Tariff Profiles,” Canada’s normal “trade-weighted” tariff average is 3.6% for goods in general, and 15.1% on farm products. Four generations of trade negotiations and signing ceremonies the 1960s — the Reagan-Mulroney “U.S.-Canada Free Trade Agreement” of 1988, the Johnson-Pearson “Agreement on Auto Trade” in 1968 a generation earlier, the Bush/Clinton/Mulroney/Salinas “North American Free Trade Agreement” of 1993 and the 2019 revision of NAFTA into the “U.S.-Mexico-Canada Agreement” — do leave a few trade barriers in place. (American trade bureaucrats have snapped lots of pencils and worn holes in many mouse pads over Canadian dairy quotas and movie regulations; to be fair: their Canadian counterparts can call up similar experiences with lumber-subsidy tariffs and “Buy American” purchasing rules.) These arguments, however, have always been financially small pieces of a much larger trade relationship, in which the trade agreements exempt American goods from nearly all Canadian tariffs. Partly mirroring this fact of policy, and partly the pull of geography, Canada matches Mexico as the largest buyer of American goods, and most of the things Canadians buy from abroad are American.
Data: So far this year, StatCanada reports Canadians importing C$357 billion worth of goods, of which C$205 billion, or about 60%, came from American farms, factories, and mines. Or, using American data, Canadians bought $334 billion of last year’s $2.2 trillion in U.S. goods exports — a billion dollars a day, and a seventh of the total.
States: Canadians were the top buyers of goods from 27 U.S. states. This is particularly evident close to the northern border — on top of the Maine, Michigan, and Wisconsin stats above, 39% of Idaho’s $4.6 billion in exports go to Canadian buyers, along with 47% of Montana’s $2.2 billion, and a startling 81% of North Dakota’s $9.4 billion. But large figures show up pretty much everywhere, with Canadians also the top buyers of goods from Alabama, Connecticut, Delaware, Georgia, Illinois, Iowa, Kentucky, Maryland, Minnesota, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Virginia, West Virginia, Wisconsin, and Wyoming.
Agriculture: Canada was just behind Mexico as last year’s second-largest buyer of American farm goods and seafood — $28.7 billion of U.S. agriculture’s $171.5 billion worldwide export total. That’s, among other things, 160,000 tons of U.S.-grown watermelon and 87,000 tons of strawberries, 3,700 tons of pecans, 45,000 tons of mushrooms, 16,000 tons of lobster, 40,000 tons of sausage, and 194,000 tons of rice.
Manufacturing: Canada is the top market for American factory goods, buying $286 billion of American manufacturers’ $1.77 trillion in worldwide sales. This includes one in every four exported U.S. cars and trucks, 1.26 billion liters of paint — enough to fill 500 Olympic pools, 2.4 million tons of makeup and eyeliner, 146,000 home washing machines, 866,000 wrenches, 12,820 MRI machines, and so on through long lists of tech products, consumer goods, planes, chemicals, medicines, and more.
Set against this, the White House’s not-very-accurately-named “Fact Sheet” points out that American wine, beer, and car sales dropped a lot last year. (“From March 2025 to February 2026, Canadian imports of alcoholic beverages decreased by about 81%, or $582 million, compared to the same period in 2024/2025”; “from April 2025 through May 2026, Canadian imports of U.S. motor vehicles decreased by approximately 25%, or $5.6 billion, compared to the same period in 2024/2025”.) They aren’t wrong about this, but there’s an obvious reason: the lost wine sales and the auto strife, and the falling tourism counts as well, are the direct result of Trump administration policy – wrongly accusing Canada of indifference to fentanyl trafficking and threatening a 25% tariff on Canadian goods in February 2025; then imposing “national security” tariffs of 25% and later 50% on Canadian steel, aluminum, and copper, and 25% on automobiles a few months later – and more generally Mr. Trump’s choice to project not good-neighborliness toward Canada but a mix of disrespect, arrogance, self-pity and other qualities that one guesses would have revolted President Reagan.
Nor was Reagan’s take on northern-border life some sort of odd exception. All modern U.S. administrations — those of Roosevelt and Eisenhower, Johnson and Nixon, Clinton, Bush, Obama — were perfectly well aware of the value Americans draw (including in trade, but far from trade only) from a close and trusting relationship with Canada. None had any trouble managing this relationship well. All left it to their successors in good shape. The next president, unfortunately inheriting something quite different, will have lots of repair work to do.
PPI’s four principles for response to tariffs and economic isolationism:
How it was & ought to be:
President Reagan signs the U.S.-Canada FTA, 1988.
Canadian Embassy state-by-state trade and investment summaries.
Canadian government offers assistance to California fire communities.
PPI’s Ed Gresser looks at the U.S.-Mexico-Canada Agreement and this summer’s “review” as of 2026. TL/DR: USMCA isn’t broken, doesn’t need major change.
How it is now:
White House yet again threatens Canada with tariffs.
A calm response from Canadian Prime Minister Mark Carney.
And the Canadian Broadcast Corporation coverage.
And some legal background:
After the collapse of last year’s “IEEPA” tariffs, Mr. Trump has turned to “Section 338” for last week’s threats. An afterthought in the larger 1930 “Smoot-Hawley Tariff” bill, it authorizes presidents to impose tariffs of up to 50% on goods from countries whose policy “discrimination” against American products causes us some commercial damage. And the background: Trade policy historian Douglas Irwin (via NBER) reconstructs the 1920s backstory to Section 338.
If last week’s threats actually go into effect, will they stand up in court? No easy answer, since no previous administration has tried to use this law and legal scholars seem uncertain about (a) whether it actually remains in effect — possibly repealed by Kennedy’s 1962 Trade Act? Maybe made moot by the Ford-era passage of “Section 301” in 1974? — and (b) if it does, whether an administration can use it ad hoc as Mr. Trump is trying to do.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
