There’s been a blizzard of commentary about the breakdown of U.S.-Canadian trade talks. Friend of TPM Paul Krugman has a good rundown of just how dependent the U.S. is on key Canadian exports — oil, lumber, hydropower electricity in addition to many other commodities. Of course, the U.S. is a net exporter of oil. But that’s in aggregate. As Paul explains, the details aren’t that simple. The upper Midwest gets most of its oil from Canada while a lot of oil produced in Texas, Louisiana and the Gulf Coast gets exported. These patterns could only be changed over many years and then at great expense. There are similar embedded dependencies on lumber and electricity. Then there are things like potash (for agriculture and some industrial production) where the U.S. gets almost all of its supply from Canada.
Of course, so far this is all hypothetical. Canada isn’t pulling these levers. The U.S. is conspicuously avoiding placing tariffs on these supplies on which it has a critical dependence. But that only highlights U.S. vulnerability. Nothing is stopping Canada from pulling those levers as Trump’s trade war of whim heats up.