How Closely is Your State's Economy Tied To Canada?

The economy of Michigan is better integrated with that of Canada than with any other state in the U.S. And as this graph shows, the Great Lakes State is not the only one with deep economic ties to our northern neighbor.

When talk is of U.S. foreign trade, the focus tends to be on China and Mexico. While those are indeed America's #1 and #3 trading partners, the #2 usually gets left out – perhaps because our trade deficit with the Canadians relatively small ($10.9 billion in 2016), while it runs to double that with Mexico, and into the hundreds of billions with China. And yet in total volume, trade with Canada equaled $544.9 billion last year, almost $20 billion ahead of Mexico ($525.1 billion) and less than $35 billion behind China ($578.6 billion). While China takes up 15.9% of all U.S. imports and exports and Mexico 14.4%, Canada represents a solid 15%. In fact, while Canada is America's #3 import country, it is #1 for exports: $266.8 billion in 2016, over $35 billion more than to Mexico, and more than double the amount America exports to China.

Top Exporters to Canada (in billion)

1. Michigan - $23.7

2. Texas - $20

3. Ohio - $19.2

4. California - $16.2

5. Illinois - $15.9

6. New York - $15

7. Indiana - $11.5

8. Pennsylvania - $10

9. Tennessee - $8.7

10. Kentucky - $7.5

Drilling down to state level, this graph puts the value of America's economic relationship with Canada into even starker perspective. The left column ranks each state by the value of total services and goods they import from Canada. The right column does the same for exports. Michigan leads both columns: importing $48.3 billion from across the border (in 2016), and exporting $23.5 billion. Even though it is home to Detroit – still America's Motor City – Michigan on its own manages to run up a trade deficit with Canada that runs to almost $25 billion. Trade with Canada represents 43.1% of Michigan's exports and 35.8% of its imports.

But a few other border states are even more dependent on Canada, in share of trade if not in absolute dollar value. North Dakota may export only for $3.2 billion to Canada and import for $1.4 billion (resulting in a healthy trade surplus of almost $2 billion), but that northern trade represents 77.6% of the state's exports, as well as 53.2% of its imports – meaning the Roughrider State might as well be a Canadian province, economically speaking at least.

Top Exporters to Canada (in %)

1. North Dakota - 82.5%

2. Maine - 47.5%

3. Montana - 46.7%

4. Michigan - 43.3%

5. Vermont - 39.7%

6. Ohio - 39.0%

7. Missouri - 37.6%

8. South Dakota - 37.1%

9. Indiana - 33.2%

10. Wisconsin - 31.4%

Maine breaks about even: the Pine Tree State ships about $1.4 billions' worth of goods and services to Canada (47.2% of its total exports), importing around $1.7 billion (50.8%). Montana is heavily dependent on Canadian imports ($2.9 billion, 82.5% of the total), while exporting around $600 (45.7% of the total) north of the 48th parallel. Other states deeply tied to Canada include Vermont, with 39.7% ($1.2 billion) of its exports going to Canada and 69.3% ($2.6 billion) of its imports coming from up there; South Dakota (exports to Canada $500 million or 37.6%, imports from Canada $400 million or 35%); and New Hampshire (exporting to Canada only $600 million, or 13.4%, but importing $4.3 billion, i.e. 49.6% of its total).

But it is not just borderline states with smaller economies that are closely linked to Canada. Ohio, the U.S. state with the 7th-largest GDP, exports $19.1 billion (38.8%) to Canada, while importing $11.5 billion (17.9%). Missouri, about 450 miles from the Canadian border, exports $5.2 billion (37.4%) to Canada and imports $3 billion (17.2%) in Canadian goods and services. Even Oklahoma does more than a quarter of its trade with Canada, both in exports ($1.4 billion, 27.9%) and imports ($2.5 billion, 30%).

Top Importers from Canada (in billion)

1. Michigan - $48.3

2. California - $27.8

3. Illinois - $25.3

4. New York - $17.6

5. Texas - $15.2

6. Washington - $12.6

7. Ohio - $11.5

8. Pennsylvania - $10

9. Minnesota - $7.5

10. New Jersey - $7.3

Lesser percentages, but much more dollars are traded between Canada and America's economically most powerful states. California – the only state with a larger population than Canada (39 vs. 36 million) – is one of only nine states exporting less than 10% of their foreign trade to Canada (9.9% in California's case). Still, since California is the state with the biggest economy, that represents a tidy $16.2 billion of goods and services going to Canada. With imports totaling $27.8 billion (6.8%) however, the result is a $11.6-billion deficit. Texas does it better: exporting more ($19.9 billion, 8.5%) and importing less ($15.2 billion, 6.6%) nets the Lone Star State a $4.7-billion trade surplus with Maple Leaf Country.

Three more states export more than $10 billion to Canada, but only Indiana has a trade balance in the black: the Hoosier State exports $11.5 billion (33.1%) to Canada and imports $7.3 billion (14.7%), which translates into a $4.2-billion surplus. Illinois, however, although exporting $15.9 billion (26.5%) to Canada, imports $25.3 billion (20.8%) from up north, resulting in a $9.4-billion deficit. New York exports $12.6 billion (16.9%), imports $17.7 billion (13.6%), which comes down to a $5.1-billion trade imbalance to the advantage of Canada.

In line with the economic axiom that trade halves when distance doubles, the states that interact least with Canada generally are furthest away.

Top importers from Canada (in %)

1. Montana - 82.4%

2. Vermont - 69.1%

3. Wyoming - 61.8%

4. North Dakota - 53.2%

5. Maine - 50.9%

6. New Hampshire - 49.6%

7. Michigan - 35.8%

8. South Dakota - 35.1%

9. West Virginia - 33.8%

10. Oklahoma - 29.9%

Hawaii and New Mexico each export only around $100 million to Canada (5.7% and 3.7% of their total exports, respectively) – although New Mexico does import 11.3% of its total from Canada (still only $300 million, though). Hawaii imports 7.8% from Canada, a puny $200 million. Washington is the state on the U.S.-Canadian border with the lowest share of its exports going across that border: only 8.8%, or $7 billion. However, the Evergreen State does source 27.1% of its imports from Canada, i.e. $12.8 billion. The result: a $5.8-billion deficit, the 4th-largest in absolute terms (after Michigan, California and Illinois).

Perhaps it is time that Washingtonians – and Americans in general – start thinking a lot more about Canada when talking about their foreign trade, and specifically about closing the gap between imports and exports.

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