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The New Economy

If Canada's so strong, why isn't it buying more US goods?

US-Canada trade is back to prerecession levels. But the real growth in US – and Canadian – exports is coming from elsewhere.

By Mary Helen MillerCorrespondent / June 8, 2011

Megan Hunt-Stewart ( right), the owner of Rowe Mountain Fair Trade in Warner, N.H., rings up a customer on May 27, 2011. Ms. Hunt-Stewart says she's importing more of her goods from Canada than she has in the past.

Mary Helen Miller / The Christian Science Monitor

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Michael Ziolkowski was shopping for tires at a Sam’s Club in northwestern New York Tuesday when he noticed something unusual.

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“There are a lot of Canadian customers over here shopping,” says Mr. Ziolkowski, a professor of international business at the College at Brockport, State University of New York.

That's not unexpected. The Canadian dollar is strong. So is the economy. All along the northern United States, more Canadian shoppers, diners, and tourists are crossing the border, looking to stretch a dollar with US purchases.

No wonder US-Canada trade is back to its prerecession high. But there's a catch: The US and Canada, each other's biggest trading partner for decades, are increasingly looking elsewhere to sell their goods.

For the first time, in 2010, the combined value of exports that the US sent to its No. 2 and No. 3 trade partners, Mexico and China, surpassed the amount sent to Canada.

Canada is similarly shifting from the US. In 2001, 87 percent of all Canadian exports went to the US. Last year? Just about 75 percent.

So where are those goods going? For the US, the biggest growth is in emerging markets, like South Korea, Brazil, Singapore, and Hong Kong. Exports to these countries didn't just return to prerecession levels. In 2010, they were up a combined 25 percent from 2007.

Canada has seen the biggest growth in exports to the United Kingdom, Germany, the Netherlands, China, Japan, and South Korea.

That doesn't mean the US and Canada won't remain each other's biggest trading partner for years to come. At a craft shop, Rowe Mountain Fair Trade, in Warner, N.H., owner Megan Hunt-Stewart says she started importing goods from Canada a few years ago. She sells things like pottery, candles, jewelry, and art in her store, and she now imports products from four Canadian providers.

But she adds, the fair trade craft market is booming everywhere. So she's not just importing more from Canada, she's importing more from everywhere.

[Editor's note: The original version miscalculated the percent increase in exports from the US to South Korea, Brazil, Singapore, and Hong Kong from 2007 to 2010.]

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