Q: We often hear about the trade deficits the U.S. has with Canada, but is it reasonable to frame the issue purely in terms of population size? How is it possible that Canada, with a population of about 40;million, buys roughly as many U.S. goods as the United States with about 345&;million people buys from Canada? The Chart Attack V.13 chapter on trade between countries was enlightening. Thank you
5i Research Answer:
Yes, it is a good point to consider that some deficits would be structural by default due to imbalances such as this. You would also naturally have trade imbalances depending on what a country can and cannot produce, such as canola in one country and bananas in another.