When we think of Canada’s* trade relationship with the United States, we tend to focus on the goods we sell (exports) rather than the goods we buy (imports). We highlight the role exports play in driving economic growth and supporting jobs. But trade is, of course, a two-way street with imports lowering costs through competition, increasing choice, and providing essential inputs that are not available domestically.

As for the U.S., it’s not only our largest foreign customer, but our largest foreign supplier.

We were reminded of the latter when Canada imposed counter tariffs on U.S. goods last spring, raising the cost of a wide range of key inputs and consumer goods. Canada, like the U.S., has suspended the tariffs on Canada-United States-Mexico Agreement (CUSMA)-compliant goods, but sectoral tariffs remain in place on both sides of the border.

Hence, the anxiety surrounding the review of CUSMA that officially starts on July 1.

With the above in mind, today’s Twenty-Four provides a basic overview of Canada’s merchandise imports from the U.S. as a complement to our ongoing analysis of exports to the U.S.

Buying American

The U.S. accounted for almost half (46%) of Canada’s merchandise imports last year making it our single largest foreign supplier. China is a distant second at 11% of the total with our other CUSMA partner, Mexico, in third spot at 7%.**  

At five percentage points below the 20-year average, the shift is relatively small, but the share of Canada’s merchandise imports coming from the U.S. hasn’t been lower since at least 1990 (the start of the current data series). The impact of Canadian tariffs and choosing to buy from non-U.S. suppliers as a reaction to U.S. protectionism are difficult to isolate using the data on hand, but these factors were definitely in play to at least some degree in last year’s pullback in purchases from the U.S. As for exports, we have shown that Canada’s reliance on the U.S. declined last year, though this was largely due to a surge in oil and gold exports to overseas markets.

What we buy from the U.S.

There are lots of different ways to slice and dice the data on what we buy from the U.S., but the basic picture is the same: we import a lot of vehicles and vehicle parts; chemicals (including pharmaceuticals), machinery; food; and oil products (including crude oil and refined products like gasoline). Together, these categories accounted for about two-thirds of Canada’s total merchandise imports from the U.S. last year.

That doesn’t mean the other third of merchandise imports aren’t important; they are just harder to lump together. Take this anecdotal example: While shopping for a new garage door last year (which would fall into the other one-third of imports), I learned that the door I wanted was made in the U.S. and had gone up in price because of steel and aluminum tariffs. Similarly, a company might be importing a key component from the U.S. that doesn’t add up to billions of dollars, but makes a huge difference to its operations.

While finding and benefiting from alternative suppliers is not impossible, the large slice of Canada’s imports from the U.S. related to vehicle manufacturing highlights the challenges that can be involved. Canada’s auto sector is highly integrated with its U.S. counterpart and the free flow of parts and finished vehicles across the border has been a core operating principle of the industry since the Canada-U.S. Auto Pact was signed in 1965.

Just as selling things to the world’s largest economy—an economy that just happens to be both right next door and linked to us in many other ways—makes a lot of economic sense, so does buying stuff from it.

So while suppliers in, and open trade with, countries other than the U.S. should be pursued, the ties that bind us to the U.S. remain critically important.

In terms of what might happen given the uncertain nature of U.S. trade policy under President Trump and the CUSMA review, a no-tariff or low-tariff trading relationship remains the ideal for both exporters and importers. If the U.S. abandons CUSMA, Canada’s importers, manufacturers and consumers would be facing higher costs as Most-Favoured-Nation tariffs on U.S. imports and stricter customs rules take effect.

Without knowing the outcome of the CUSMA review, we must make assumptions when developing a forecast. Our base case assumes the agreement survives in some form, an exemption from blanket tariffs will be maintained by both the U.S. and Canada, and sector-specific tariffs will stick around.

Other outcomes are, of course, possible, so we will be watching the negotiations very carefully and reporting on what we learn in future editions of The Twenty-Four. ATB’s CUSMA 2026 Playbook will also continue to be updated.  

*Provincial-level import statistics are problematic due to the "port of entry" bias, where goods are credited to the province where they clear customs, rather than where they are ultimately consumed. For this reason, today’s Twenty-Four examines total national imports rather than provincial imports.

**Notwithstanding the importance of the importing side of the equation, we sell a lot more goods to the U.S. than we buy from it. Last year, Canada’s merchandise exports to the U.S. totalled $565 billion—$203 billion more than we imported from it—and accounted for 72% of our total international sales.

Answer to the previous trivia question: China produces the most electric vehicles.

Today’s trivia question: How much oil, in dollar value terms, did Canada import from the U.S. in 2025?