APS-004: Competition from China is Not Largely Responsible for Canada’s Decline in Share of U.S. Imports

David Boileau, Office of the Chief Economist, DFAIT
January, 2007

Executive Summary

Canada’s share of U.S. merchandise imports experienced a steady decline over the past decade, while China’s share of U.S. merchandise imports increased rapidly. However, this does not necessarily imply that China’s gain in share was at the expense of U.S. imports from Canada. This paper decomposes Canada’s drop in share of U.S. imports into sectors, and reveals that the sectors which contributed the most to Canada’s loss in share were not sectors in which China made significant gains. In fact, more than half of the loss in Canada’s share came from the motor vehicles and ores and metals sectors alone, sectors in which China is currently of little competition to Canada. This paper does not attempt to answer why Canada has lost share of U.S. merchandise imports, but eliminates competition from China as being the main contributor to Canada’s decline in share.

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