Nearly Two Decades of US-Canada Trade Balance Data

There seems to be some confusion regarding the distinction between trade balance in goods and services (a typical macro variable of interest) and trade balance in goods (more commonly reported, but less and less relevant on its own as countries become more service intenstive). In order help remedy this confusion, I plot below freely and easily accessible data, for those willing to expend a few calories to click.

Figure 1: US-Canada bilateral trade balance (bold blue), and merchandise trade balance (red). NBER defined recession dates shaded gray. Source: BEA/BuCensus (Tables 3 and 6), NBER.

The Canadian estimate of the US-Canada deficit differs from the US along a variety of dimensions (definitions, coverage, etc.). A detailed discussion and reconciliation for 2010-2011 is provided in this 2013 BEA article, which deals (among other things) with re-exports. (Dean Baker deals discusses re-exports but not other aspects of reconciliation.)

Old Fogie Rant at 11:35PMAM Pacific: People keep on asking me where the data are from, or for me to compile the relevant series and post the corresponding workfile or Excel file. If I had an RA for this blog, I would — but I don’t make any money off of this blog to fund such an enterprise — so here are some links where pretty much all the data I plot are from.

27 thoughts on “Nearly Two Decades of US-Canada Trade Balance Data

  1. pgl

    “Dean Baker deals discusses re-exports but not other aspects of reconciliation”.

    That was quite polite! Dean declares Trump to be correct but only because he also left our the services balance. Note that the readers of his blog caught that omission.

  2. pgl

    We had a sizable trade deficit with Canada from 1999 to 2008. Any care to speculate on what caused this deficit to decline and flip to surplus?

    Of course knowing Team Trump – he will start defining the trade balance correctly but will report the 1999 to 2017 average!

  3. pgl

    Using the BEA data – take a look at our trade in goods and services with Hong Kong. We exported $52 billion to them in 2017 and imported $17 billion? But it is a tiny nation. Oh wait – this relates to trade with China – something called processed trade. If we combine the China and Hong Kong accounts, our trade deficit does not look that awful.

    Of course do not expect to hear that from this White House!

    1. Moses Herzog

      @ pgi
      Your point is a legitimate one. And I couldn’t even debate this with you now if you hadn’t found the outstanding Excel link and DL. But, are you telling us we should be dancing in the streets because we have gone from 100% of an ungodly/grotesque trade number to 89.7% of an ungodly/grotesque trade number??

  4. Moses Herzog

    @ Menzie
    I’m really starting to think you missed your true calling as a stand-up comedian: “for those willing to expend a few calories to click”

    I was going to ask you what you thought about Dean Baker’s re-exports argument, put you appeared to have matched my question and raised it 5 poker chips before I could even type the question. Kudos Sir.

    I was assuming the whole time you actually did not know where the BEA services data was, but now I think you knew the whole time and were giving a little IQ/effort test to your readers. And it kind of pains me to think “Ed Hanson” beat me to the punch. I still wonder if there is a way to match the Canadian figures (which I found the 2016 numbers for) with the American numbers to see if they mirror each other (as a cross-check for accuracy). But maybe since the exchange rate is continually moving this becomes harder to compare in a “mirror fashion”?? Oh well.

    1. Menzie Chinn Post author

      Moses Herzog: I didn’t know where the long series were before pgl indicated it. Comparing to StatsCanada data would be interesting. The 2013 BEA article I linked to is a good starting point for explaining why the series differ.

      1. Moses Hoses

        Appreciate the guidance in the right direction on the series differentiation. Yea, I’m a little jealous she found it before me. Especially that Excel link is so cool. To be able to DL all that in such a neat and tidy data set. “pgi” has got a good eye for finding some of those gem links.

  5. Moses Herzog

    @ Menzie, Addendum to my above comment
    Menzie, you really really really need to get an “RA”. Doris Kearns Goodwin, Kevin Hassett, and Freed Zakaria personally attest that when you want to plagiarize others work or steal their time writing and creating their own work in research libraries—there is no one better to lay the blame on then the nearest “RA”. However Maureen Dowd says if you don’t have the money for an “RA” you can blame it on a phone conversation you had with a friend that had been trapped in your subconscious, then came out of your fingers, verbatim as it had been written in an article. Maureen says that’s a good “back up” when an “RA” isn’t handy.

  6. Ed Hanson

    Thanks Menzie,

    I just stumbled on the reported numbers problem, see my last post under “Where Should POTUS Get His/Her Data From?” I have started to read the BEA paper to attempt to clear up the discrepancies.


  7. pgl

    The Census data gives us the details on how we lower our merchandise deficit so much from 2008 to 2017. We are exporting $20 billion more to Canada than we were back in 2008 and importing $40 billion less. Much of the reduction in imports from Canada are attributable to less imports of fuel oil and natural gas.

  8. 2slugbaits

    I’m still not understanding why anyone should care what the bilateral trade balance is between any two countries. Is that supposed to inform some policy decision? Suppose the US did run a trade balance (goods & services) deficit with Canada…so what? Why should I care?

    1. Menzie Chinn Post author

      2slugbaits: The importance eludes me too. Unless I were a steel producer, and I wanted to push a gullible public official to erect protectionist barriers. Or I want to evaluate comparative advantage. Of course, in the latter, one would be as interested in composition as well as balance.

      1. Moses herzog

        I was going to say at bare minimum it gets back to efficiency and productivity—but obviously that’s same thing as comparative advantage. You know, maybe I have this part of my personality that likes banging my head repeatedly against the wall, but I keep going back to this site and skimming the links there (off of the main page to links like the following).

        Why do so many of these say “status discontinued”?? I’m assuming another Canadian government agency picked up where they left off?? I still insist the link below is a pretty good link, outside the fact they don’t seem to have the 2017 year numbers. Not as good as the BEA links that “pgi” found, but I have yet to find a better Canadian based link than this one.
        Though I would be very happy if someone can show me a better/ more up-to-date Canadian based link for Canadian Economic Accounts for bilateral with the USA. Again, I know BEA are better, but I’d like to find the best Canadian based one for Canadian Economic Accounts.

    2. pgl

      When Trump was hanging with the PM of Australia – the Aussie kept talking about how great trade was even though the US has a trade surplus with Australia. By Trump’s logic, the Aussies are losing in their trade with us. Of course we supply them with equipment so they can produce energy products that they sell to China. At the end of the day – the Aussies do very well while we have a trade deficit with China. Me? I like the fact that I buy my running shoes and winter coat made in China at reasonable prices. And is Nike losing money? How about Apple on those iPhones assembled in China?

      1. 2slugbaits

        I think a lot of that kind of thinking comes from seeing the macro economy as a kind of large household in which exports count as income and imports count as household expenses. The household’s goal being the accumulation of wealth. The household analogy satisfies a lot of mercantilist intuitions, and people who don’t have any formal training in economics tend to be attracted to that particular intuition. It just seems like common sense. I’ve found that business majors tend to have the same view on trade, which might explain why Trump sees international trade as a zero sum game. And to the extent that they do understand trade, they all too frequently confuse comparative advantage and absolute advantage, which are two very different concepts.

      2. Moses herzog

        @ pgi and @ 2slugbaits
        In the “big picture” you guys are right. And actually I don’t disagree with you that much. But just sloughing off some of these complaints about fair trade (in general, not Trump’s in particular) as “Well these people just never took economics classes” as we hike our pants and snort is a little too easy. There have been and still are legitimate concerns not only about dumping, which still happens and is still sometimes ignored by the WTO—but worse there are a lot of government subsidies that go into driving American industries completely out of business. Did japan make superior electronics and superior cars starting around the ’80s and up to now?? Yes—but a significant part of that achievement in making superior electronic products and making superior cars was getting targeted subsidies from the Japanese government. And can anyone say the way China tracks money in their country (i.e. if there was an Olympic event for opaqueness in financial transactions China would have won the gold, silver, and bronze for roughly the last 50 years straight) that they have ANY idea how much and which companies China is illegally subsidizing?? We are supposed to believe WHO knows this?? The IMF??—that ignores insolvent loans on French and German banks’ balance sheets while waving the naughty finger at Greece?? Who exactly would know how much and where China subsidizes its exporting industries?? Lets not pretend that because we majored in economics that all of these complaints are bogus—there are some substantive cases to be made.

        1. 2slugbaits

          Moses Herzog There are legitimate problems with a naïve model of unfettered international trade. I’m not arguing that point. My larger point is that simple, intuitive, “common sense” economic models are almost always wrong. There’s a reason why we need formal economics. If the simple household analogy was a good model, then there would be no need for the economics profession. Very few laymen pretend to understand brain surgery or corporate law or quantum mechanics or even automobile repair on today’s cars. Almost everyone recognizes the technical nature of these disciplines; but yet when it comes to economics almost everyone pretends to understand it. People do understand the household economy (BTW, “oikos” is the Greek root for our word “economics”) and naturally assume that this knowledge transfers to an understanding of macroeconomics. For example, I don’t think most Tea Party activists were especially stupid. Indeed, I suspect that many of them were quite successful in business and managing their household economies; but this only reinforced their belief that they understood macro. It doesn’t help matters that there are so many “hired gun” economists out there willing to sell their services as lobbyists. It gives the man-on-the-street permission to believe his opinion is just as good as anyone else’s. And today’s secondary education system doesn’t help matters either. Back when I was in high school we used Samuelson’s textbook and learned all about the Keynesian cross and IS-LM. Today’s high school economics is all about household budgets and calculating mortgage payments.

  9. Erik Poole

    pgl wrote: “We had a sizable trade deficit with Canada from 1999 to 2008. Any care to speculate on what caused this deficit to decline and flip to surplus?”

    Speculation follows. Commodities had an exceptional run right across the board from the late 1990s to the financial crisis of 2008. The Canadian economy was and still is levered to natural resources. Investment in oil, especially oil sands, natural gas and other commodities increased dramatically. Note that based on accounting principles alone, with a strong surplus in the capital account, the current account should be negative.

    Canadian resource companies would have imported significant amounts of machinery and equipment during this period, much of that imported M&E would have come from the USA. The Canadian dollar increased by over 20% to par or better with the US dollar. The stronger US dollar would have encouraged imports by consumers and other sectors of the economy.

    With US recession starting in late 2007 and then the US financial crisis taking hold in late 2008, global aggregate demand for commodities plummeted. Foreign investment flows would turn negative and purchases of imported M&E for resource sector companies would have dropped off. The Canadian dollar weakened, now discouraging imports by consumers and producers.

    End of speculation.

  10. Ed Hanson

    Repeat post from previous topic

    File this under does anyone know the trade dats? And I mean you, me, Trump, our Trade Rep, and the Canadian Office of Global Affairs. As you know I have been searching for numbers from various sources. My latest has been with Canada to see what they say. I found this at the Office of Global Affairs.
    Scrolling about half way down I found these numbers. Assumption is all values in million Cad $.
    Goods Exports, 2016 — U.S. — 392,462
    Goods Imports, 2016 — U.S. — 359,954
    Services Exports and Imports by Region
    United States exports 58,999 — imports 70,323 –difference -11,324
    Adding these numbers and using an exchange factor of .75 USd to Cad (close approximate 2016 average)

    21,184 x .75 = 15,888 million $ US balance. So Canada sees that it has the big surplus.

    That is a heck of a discrepancy. I look for errors but have not found them, but would welcome anyone’s catch of one.
    So, Where Should POTUS Get His/Her Data From? Possibly nowhere because no one knows.
    The Goods numbers have good agreement with the statCan numbers referenced above, but I have not checked Goods numbers against the US numbers. The biggest uncertainty seems to be in the Service numbers. I have not found how they are collected, only, from the timing, I am fairly certain they are not from IRS data.


    PS. I again find that POTUS in the case of trade data should not listen to anyone. Current data is always incomplete, inaccurate, unavailable in part, and subject to large adjustment. However POTUS should listen to those who observe the trend. And for the US, trade trend is against it, so POTUS is listening carefully.

    As for Canada and Mexico, the uproar found here nd in the media is tempest in a teapot. Any problems within the three countries are already in negotiation, an hopefully an improved and modernize NAFTA will result. The real trade problems is with Europe. China, Japan and to lesser amount S Korea. These countries are each large enough and rich enough to change policies to improve trade not only with the US but with the world. Its a shame that it takes threats of tariff and other actions to bring these countries to the table, but doing nothing is not the answer.

  11. Ben Arownd

    “The biggest uncertainty seems to be in the Service numbers. I have not found how they are collected, only, from the timing, I am fairly certain they are not from IRS data.”

    For both countries services are collected via quarterly business surveys. As a result, services trade is not considered as reliable as merchandise trade, which is largely based on Customs administrative data. Services exports are better measured than services imports due to the concentration of exports among large firms.

    As noted, the US and Canada engage in bilateral reconciliation exercises every few years to identify sources of differences in US exports to Canada vs Canadian imports from the US and vice versa. Merchandise differences are usually very small due to a joint data sharing agreement whereby the US uses Canadian import data to measure US exports to Canada and Canada uses US import data to measure Canadian exports to the US. This is because import data are typically more reliable than export data due to Customs regulations. Some of the differences are due to the treatment of inland transport to the border. Some exchange of services trade data also takes place where it is decided that one country has better measures than the other.

    Bilateral reconciliation exercises are very difficult even when resources are available. However, they are taking on increasing importance among countries due to the need for consistent bilateral foreign trade data for measuring trade on a value-added basis.

  12. Ed Hanson

    Exactly Ben,

    Your post confirms that it is impossible to rely on the data in the time demanded on the POTUS. So the whole tempest of whether he knew the numbers o not just confirms that nobody, I repeat, nobody knows the numbers. Any numbers that can be reasonably accurate are years away from the time of decision. And again. I contend its the trend that determines the action, and that is what we vote our leader representatives to do, use their best judgement, in this case the trend.

    And in a way, I am sorry even to continue to bring up the differences between Canada and the US. It will resolve itself with the negotiations along with Mexico.
    Emphasizing Canada is a purposeful political move to distract from the real problem, and that comes from China, the major EU economies, Japan, and S Korea.


    1. Menzie Chinn Post author

      Ed Hanson: USTR knew the answer according to official US government sources. Everybody — even the press — knew it from the USTR website. The USTR page was one of the first things that pops up when one uses “the Google”…

  13. Ed Hanson


    Not the point. They have a value. the Canadians have a different value. The actual value will never be known, but it will be years before a value comes that you can have reasonable trust. And Menzie, even so, it is not the number that counts, its the trend. And finally, Menzie, it is not Canada that matters but Germany. France and Italy in the EU, and China, Japan, S Korea in Asia. Why do you keep deflecting? To me, the answer is with the political Menzie, not the economist.


    1. Menzie Chinn Post author

      Ed Hanson: We have a number for Russian ICBMs. The Russians have a number for Russian ICBMs that they would be happy to disclose to us. Which one do you take, as head of USG?

      Who’s to say what the trend is. It looks one way on annual basis, on a short enough span using quarterly data, the trend looks like it’s improving for the US…

      1. Ed Hanson


        Honestly, will nothing deflect you from your deflection from serious problem. Canada is not the problem, you say so, I say so, and guess what, so does President Trump, remember he is the one who exempted Canada and Mexico.

        Menzie, please for awhile, leave political Menzie, behind and return to us the economist Menzie. As for trend Menzie, it was your post March 1st that you gleefully proclaimed that you “had enough of “winning so much”. ” I repeat, that’s the trend, that’s the problem the President is working on. As I have said to other blog economist, criticism is easy, proposing a solution is hard. At least the President is focus on bringing the crisis to head.

        How do you like his proposed method of country to country bilateral trade agreement, and getting away from the bureaucratic, slow acting, poorly negotiated multi-nation agreements like the WTO. Nothing wrong with free trade, but it always must be acknowledge that freer trade is not free trade.

        I like it. Each country has better control of its own interest, while acknowledging directly the other countries interest.

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