# Canada: Background and U.S. Relations

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/crs%3AR47620

## Record

- **Collection:** Congressional research report
- **Document type:** Reports
- **Published:** January 10, 2025
- **Citation:** R47620

## Text

Canada: Background and U.S. Relations
Updated January 10, 2025

Congressional Research Service
https://crsreports.congress.gov
R47620

SUMMARY

Canada: Background and U.S. Relations
The United States and Canada are close partners, bound together by a 5,525-mile border as well
as by shared history and values. The countries maintain long-standing mutual security
commitments under NATO and the binational North American Aerospace Defense Command
(NORAD). The United States and Canada also have one of the largest bilateral commercial
relationships in the world, with an average of more than $2.5 billion of goods and services
crossing the border each day in 2023. Other areas of U.S.-Canada cooperation include crossborder law enforcement and the management of transboundary natural resources. Given the high
degree of integration between Canada and the United States, Members of Congress often track
bilateral relations and assess how Canadian policies may affect the United States.

R47620
January 10, 2025
Peter J. Meyer,
Coordinator
Specialist in Latin
American and Canadian
Affairs

Canada’s Domestic and Foreign Policy
Justin Trudeau has served as Canada’s prime minister since 2015. His center-left Liberal Party currently holds a plurality in
the House of Commons and must secure the support of other parties to advance its agenda in Parliament. Over the past nine
years, the Liberal Party government has prioritized policies intended to address climate change and to strengthen Canada’s
social safety net. While continuing to advance those initiatives, the Liberal Party government has placed more emphasis on
addressing Canadians’ cost-of-living concerns over the past three years as Canada has contended with elevated inflation and
relatively slow economic growth (estimated at 1.3% for 2024). In a December 2024 poll, 26% of Canadians expressed
satisfaction with Prime Minister Trudeau’s government and 69% expressed dissatisfaction. On January 6, 2025, Trudeau
announced he would step down after the Liberal Party elects a new leader. Polls conducted prior to Trudeau’s announcement
suggest that the center-right Conservative Party, led by Pierre Poilievre, is currently poised to win a parliamentary majority
and control of the government in Canada’s next federal election, due by October 2025.
The Trudeau government has adhered to Canada’s traditional approach to foreign policy, emphasizing multilateral diplomacy
and contributions to collective security alliances. Among other actions, Canada under Prime Minister Trudeau has bolstered
its support for NATO operations, deploying additional military personnel to Eastern Europe since Russia’s February 2022
invasion of Ukraine. Canada also has joined with the United States and other like-minded countries to push back against
actions by China that undermine international norms and standards. Although the Liberal Party government has doubled
nominal defense expenditures since 2014, Canada has yet to meet its NATO defense spending commitment and the Canadian
Armed Forces continue to contend with personnel shortfalls and inadequate equipment.

U.S.-Canada Relations
Over the past four years, President Joseph Biden and Prime Minister Trudeau have sought to revitalize and expand the U.S.Canada partnership. Among other areas of cooperation, the U.S. and Canadian governments have taken steps to modernize
NORAD, strengthen cross-border law enforcement, and accelerate the deployment of renewable energy and low-carbon
technologies. Nevertheless, the U.S. and Canadian governments have continued to disagree on some policy matters, such as
the taxation and regulation of digital services and the construction and maintenance of certain cross-border oil and gas
pipelines.
U.S.-Canada relations are entering a renewed era of uncertainty after Donald Trump’s November 2024 election to a second
presidential term. From 2017 to January 2021, the Trump Administration challenged long-standing pillars of the bilateral
relationship, including common commitments to NATO and free trade in North America. This, along with divergent
approaches to a range of issues, strained U.S.-Canadian relations during those years. President-elect Trump’s statements
during and since the 2024 presidential election, including proposals to impose tariffs on imports from Canada, suggest the
countries may be on the cusp of another contentious period in the bilateral relationship.

Congressional Action
U.S.-Canada relations remained of interest to the 118th Congress. In committee hearings and other oversight efforts, some
Members examined challenges at the U.S.-Canada border, NORAD’s capabilities and resource requirements, and
implementation of the United States-Mexico-Canada trade agreement (USMCA), among other issues. In terms of legislation,
Congress enacted various provisions related to foreign affairs, defense, and border security cooperation in annual National
Defense Authorization Acts (P.L. 118-31 and P.L. 118-159). Congress also provided funding for NORAD, binational
commissions that help manage environmental and natural resources issues, and other initiatives related to bilateral treaty
obligations in annual appropriations legislation (P.L. 118-47). The 119th Congress may consider whether and how to continue
shaping U.S.-Canada relations using its legislative and oversight prerogatives.
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Canada: Background and U.S. Relations

Contents
Introduction ..................................................................................................................................... 1
Canada’s Political and Economic Environment .............................................................................. 1
Canada’s Foreign and Defense Policies........................................................................................... 6
NATO Commitments................................................................................................................. 6
Support for Ukraine................................................................................................................... 8
Relations with the People’s Republic of China and the Indo-Pacific........................................ 9
Arctic Policy............................................................................................................................. 11
U.S.-Canada Relations .................................................................................................................. 13
Security Cooperation............................................................................................................... 15
NORAD ............................................................................................................................ 15
Border Issues..................................................................................................................... 17
Trade and Investment Issues ................................................................................................... 20
Automotive Trade ............................................................................................................. 22
Critical Minerals and EV Battery Supply Chains ............................................................. 25
Digital Services ................................................................................................................. 27
Canadian Dairy Tariff-Rate Quotas and Supply Management System ............................. 32
Softwood Lumber ............................................................................................................. 33
Government Procurement and Federally Funded Infrastructure ....................................... 36
Energy, Environmental, and Natural Resources Issues ........................................................... 37
Bilateral Energy Trade ...................................................................................................... 37
Cross-Border Energy Infrastructure Disputes ................................................................... 38
Climate Change Collaboration .......................................................................................... 41
Binational Commissions ................................................................................................... 42
Great Lakes Cooperation .................................................................................................. 49
Columbia River Treaty...................................................................................................... 53
Outlook .......................................................................................................................................... 54

Figures
Figure 1. Encounters and Interceptions at the U.S.-Canada Border Between Points of
Entry: 2016-2024........................................................................................................................ 19

Tables
Table 1. Canada and United States: Selected Comparative Economic Statistics, 20222024 .............................................................................................................................................. 4
Table 2. U.S. Crude Oil Imports from Canada: 2019-2023 ........................................................... 38
Table 3. Canada and United States: Selected Comparative Greenhouse Gas Emissions
Indicators, 2021 .......................................................................................................................... 41
Table 4. U.S. Funding for Selected U.S.-Canada Binational Commissions,
FY2023-FY2025 ........................................................................................................................ 43

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Contacts
Author Information........................................................................................................................ 55

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Introduction
Shared history, geography, and values underpin the relationship between the United States and
Canada. The countries share mutual security commitments under NATO; maintain a close
intelligence partnership as members of the “Five Eyes”; cooperate on continental defense through
the binational North American Aerospace Defense Command (NORAD); and coordinate
frequently on law enforcement efforts, with a particular focus on securing their shared 5,525-mile
border.1 Bilateral trade and investment ties are extensive, bolstered by more than three decades of
free trade under the 1989 U.S.-Canada Free Trade Agreement, the 1994 North American Free
Trade Agreement (NAFTA), and the 2020 United States-Mexico-Canada Agreement (USMCA).2
The United States and Canada also work together to manage transboundary environmental and
natural resources issues, including through numerous initiatives at the state/provincial and local
levels. Nevertheless, with a population (41.5 million) and economy roughly one-tenth the size of
those of the United States, Canada historically has sought to protect its autonomy and unique
identity and some Canadians have been wary of policies they perceive to cede sovereignty to the
United States.3
Due to the many similarities and high degree of integration between Canada and the United
States, legislators in both countries often study policies proposed or implemented across the
border. The U.S. Congress and Canadian Parliament have engaged directly for more than 65 years
through the Canada-United States Inter-Parliamentary Group (see text box below). During the
118th Congress, some Members of Congress expressed particular interest in U.S. and Canadian
efforts to respond to geostrategic competition from Russia and China, modernize NORAD, secure
the shared border, implement USMCA, accelerate the deployment of low-carbon technologies,
protect and restore the Great Lakes, and update the Columbia River Treaty.4 The 119th Congress
may continue to examine Canada’s approach to such issues as it considers appropriations and
other legislation and engages in oversight of U.S. policy.
Canada-United States Inter-Parliamentary Group
Since 1959 (P.L. 86-42, H.Rept. 86-215), the U.S. Congress and the Canadian Parliament have maintained an InterParliamentary Group (IPG) to foster mutual understanding and discuss bilateral and multilateral matters of
concern to both countries. The U.S. Section of the IPG includes bipartisan representatives of the U.S. House and
Senate, and the Canadian Section includes multiparty representatives of the Canadian House of Commons and
Senate. Members historically have met annually, with the location alternating between the United States and
Canada. The Canadian Section is expected to host the next meeting in 2025.

Canada’s Political and Economic Environment
Canada is a constitutional monarchy and a parliamentary democracy. Although Canada gained
self-governance over most matters upon confederation in 1867, autonomous control over its
1 In addition to the United States and Canada, the “Five Eyes” intelligence alliance includes Australia, New Zealand,

and the United Kingdom.
2 Often referred to as the Canada-United States-Mexico Agreement (CUSMA) in Canada.
3 Government of Canada, Statistics Canada, “Canada’s Population Estimates, Third Quarter 2024,” December 17, 2024.
Also see, for example, CBC News, “Border Talks ‘Not About Sovereignty:’ Harper,” February 4, 2011; and Neil
Macdonald, “With Its New Trade Deal, Canada Surrenders Sovereignty to a Bully,” CBC News, October 1, 2018.
4 Low-carbon technologies typically refer to processes, products, or services that reduce the greenhouse gas emissions
associated with an activity or product. University of Ottawa, Smart Prosperity Institute, Growing Clean: Investment
Flows in Low-Carbon Technology to 2030, June 2019, p. 2.

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foreign affairs in 1926, and full independence from the United Kingdom (UK) in 1982, it
maintains some political ties to the British Commonwealth.5 King Charles III is the head of state;
a governor general, appointed by the king on the advice of Canada’s prime minister, represents
the king in Canadian affairs and carries out certain constitutional, ceremonial, and
representational duties. Canada’s bicameral Parliament includes an elected, 338-seat House of
Commons and an appointed, 105-seat Senate.6 Canadians elect Members of the House of
Commons from individual districts (ridings) under a first-past-the-post system, which requires a
plurality of the vote to win a seat. Following a parliamentary election, the governor general
typically calls upon the party with the most seats to form a government, and the leader of that
party typically becomes the prime minister. A government lasts as long as it can command a
parliamentary majority, for a maximum of four years. Under Canada’s federal system, the
national government shares power and authority with 10 provinces and three territories, each of
which is governed by a unicameral assembly.
Justin Trudeau has served as Canada’s prime minister since 2015. His center-left Liberal Party
won an outright majority in the House of Commons in the 2015 federal election, and a plurality of
seats in both the 2019 federal election and a 2021 snap election.7 The Liberal Party currently
holds 153 seats in the House of Commons. The Conservative Party of Canada, which holds 120
seats, is the Official Opposition. Given the Liberal Party’s lack of a majority, Trudeau’s
government must obtain support from other parties—such as the left-of-center New Democratic
Party (NDP), which holds 25 seats, or the Quebec sovereignty-focused Bloc Québécois, which
holds 33 seats—to remain in power and advance its legislative agenda.8 In March 2022, the NDP
agreed to support the Liberal Party government on key votes until June 2025 in exchange for the
Liberal Party advancing certain NDP policy priorities.9 The NDP walked away from the
agreement in September 2024, however, reportedly due to some policy disagreements and in
order to distance the NDP from the government in advance of the next election.10
Addressing climate change has been one of the Liberal Party government’s top priorities. In 2016,
Trudeau negotiated with Canada’s provinces and territories to adopt the Pan-Canadian
Framework on Clean Growth and Climate Change, which imposed a price on carbon emissions.
The Canadian Net-Zero Emissions Accountability Act, enacted in 2021, enshrined Canada’s
commitments under the Paris Agreement to reduce greenhouse gas emissions by 40%-45% below
2005 levels by 2030 and to reduce net greenhouse gas emissions to zero by 2050.11 The act also
established an independent Net-Zero Advisory Body to inform policy decisions and required the
government to produce interim emissions reduction targets, plans, and progress reports. Major
5 Government of Canada, Department of Justice Canada, “The Canadian Constitution,” August 26, 2024; and U.S.

Department of State, Office of the Historian, “A Guide to the United States’ History of Recognition, Diplomatic, and
Consular Relations, by Country, since 1776: Canada,” https://history.state.gov/countries/canada.
6 The governor general officially appoints senators on the advice of the prime minister. In 2016, Canadian Prime
Minister Justin Trudeau established the Independent Advisory Board for Senate Appointments to provide merit-based,
but nonbinding, recommendations on nominations to the upper house.
7 Although elections were not due until 2023, Governor General Mary Simon, at Trudeau’s request, dissolved
Parliament in August 2021, triggering a snap election in September 2021. Trudeau asserted the election was necessary
for Canadians to determine the direction of the country at a pivotal moment in Canada’s recovery from the COVID-19
pandemic.
8 The remaining seats are held by the Green Party (2), independents (4), or are vacant (1). Parliament of Canada, House
of Commons of Canada, “Party Standings in the House of Commons,” accessed December 20, 2024.
9 Prime Minister of Canada, Delivering for Canadians Now, A Supply and Confidence Agreement, March 22, 2022.
10 Kyle Duggan, “Why Canada’s Progressive Party Just Dumped Trudeau,” Politico Pro, September 7, 2024.
11 Net-zero emissions refers to a situation where any continued human-caused greenhouse gas emissions are balanced
by carbon removed from the atmosphere and stored in products or geological, terrestrial, or ocean reservoirs.

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components of Canada’s plan include raising the price of carbon incrementally from C$50 (about
$37)12/ton in 2022 to C$170 ($125)/ton in 2030 and increasing regulatory and financial incentives
for investments in clean energy, low-carbon manufacturing, and carbon capture and storage
technologies.13 Canada’s Office of the Parliamentary Budget Officer projects that the government
will spend C$103 billion ($76 billion) from 2022/23 through 2034/35 on six investment tax
credits enacted, in part, to compete with the United States in attracting clean energy investments
following the enactment of P.L. 117-169, often referred to as the Inflation Reduction Act of
2022.14
The Liberal Party government’s efforts to reconcile Canada’s Paris Agreement commitments with
its role as a major oil and gas producer have drawn criticism from the energy sector and
environmentalists. Some in the oil and gas industry, which accounted for 7.2% of Canada’s gross
domestic product (GDP) and 30.6% of Canada’s greenhouse gas emissions in 2022, maintain that
Canada’s targets are unrealistic.15 Meanwhile, some environmentalists contend that Canada needs
to reduce its emissions and transition away from fossil fuels more quickly than the government’s
current plan envisions.16
The Liberal Party government also has sought to strengthen and expand Canada’s social welfare
system. During their first four years in power, the Liberals increased cash transfers to help
families with the cost of raising children and expanded parental leave and pension benefits.
Following the onset of the COVID-19 pandemic, the Canadian government created a series of
temporary relief programs that provided C$210.7 billion (about $154 billion, or 10% of Canada’s
2021 GDP) in direct financial support to individuals and businesses between March 2020 and
May 2022.17 Those government transfers, on average, exceeded Canadians’ market income losses.
More recently, the Liberal Party government enacted legislation to enhance labor protections and
to create new dental care and prescription drug programs as part of its agreement with the NDP.
Canadians have consistently identified the cost of living as the top issue facing Canada in public
opinion polls taken since 2022.18 Consumer prices rose by 6.8% in 2022 and 3.9% in 2023,
contributing to two consecutive years of declining inflation-adjusted wages (see Table 1). Canada
also has experienced a sharp reduction in housing affordability, with home ownership costs
increasing from 42.2% to 58.4% of median household income between the first quarter of 2020
and the third quarter of 2024.19 Canada’s unemployment rate has begun to rise as relatively slow

12 Currency conversions throughout this report are based on the average exchange rate from January 2024 through

November 2024 of C$1.36/U.S.$1. Data from the Board of Governors of the Federal Reserve, “Foreign Exchange
Rates,” December 2, 2024.
13 The carbon price is scheduled to rise from C$80 ($59)/ton in 2024 to C$95 ($70)/ton in April 2025. Government of
Canada, Environment and Climate Change Canada, 2030 Emissions Reduction Plan, March 2022.
14 Rolande Kpekou Tossou, Nora Nahornick, and Tim Scholz, The Long-Term Fiscal Cost of Major Economic
Investment Tax Credits, Government of Canada, Office of the Parliamentary Budget Officer, July 3, 2024.
15 Nia Williams, “Canadian Oil Industry at Odds with Trudeau over New 2030 Climate Plans,” Reuters, March 31,
2022; Government of Canada, Natural Resources Canada, Energy Fact Book 2023-2024, 2023, p. 100; and
Government of Canada, Environment and Climate Change Canada, National Inventory Report 1990-2022, 2024, p. 11.
16 See, for example, Climate Action Tracker, “Canada,” August 26, 2024.
17 Office of the Auditor General of Canada, COVID-19 Pandemic Report 10: Specific COVID-19 Benefits, December
2022, p. 5.
18 In September 2024, 57% of Canadians surveyed identified the cost of living as one of the top three issues facing
Canadians. Angus Reid Institute, “Federal Politics: Concern Over Immigration Quadruples Over Last 24 Months,”
September 4, 2024.
19 Robert Hogue, “Homebuyers Get Some Affordability Relief but Strains Endure,” Royal Bank of Canada, December
20, 2024.

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economic growth (estimated at 1.3% in 2024) has coincided with higher levels of immigration.20
Canada’s Conservative Party, led by Pierre Poilievre, has blamed the Liberal Party government’s
environmental, fiscal, and immigration policies for these socioeconomic challenges.21
Table 1. Canada and United States: Selected Comparative Economic Statistics,
2022-2024
Canada

United States

2022

2023

2024
(est.)

2022

2023

2024
(est.)

2.4

2.5

2.6

26.0

27.7

29.1

63,063.6

63,811.7

65,306.5

76,147.3

80,706.1

84,207.9

4.2

1.5

1.3

2.5

2.9

2.7

Agriculture

2.0

1.9

1.9

0.8

0.8

0.8

Industry

24.5

24.0

24.5

16.8

16.8

16.9

Services

73.6

74.1

74.6

82.3

82.4

82.3

Exports of Goods & Services (% GDP)

33.9

33.3

32.6

11.6

11.0

10.9

Imports of Goods & Services (% GDP)

33.4

33.3

32.9

15.3

13.9

14.1

Unemployment Rate (% of labor force)

5.3

5.4

6.3

3.6

3.6

4.1

Inflation (% change in consumer prices)

6.8

3.9

2.4

8.0

4.1

2.8

Average Real Wages (% change)

-3.1

-0.1

1.5

-1.5

0.8

1.1

Budget Balance (% of GDP)

0.1

-0.6

-1.2

-5.4

-6.2

-7.1

100.7

101.9

100.5

95.0

96.0

98.0

Indicator
GDP (Nominal PPP, trillions U.S.$)
GDP Per Capita (Nominal PPP, U.S.$)
Real GDP Growth (% change)
Sectoral Components of GDP (% of
GDP)

Public Debt (% of GDP)

Source: Economist Intelligence Unit (EIU), “Data” tool, accessed January 2, 2025. Data derived from
Government of Canada, Statistics Canada; U.S. Department of Commerce, Bureau of Economic Analysis; U.S.
Department of Labor, Bureau of Labor Statistics; U.S. Department of the Treasury; U.S. Office of Management
and Budget; and the Organisation for Economic Co-operation and Development.
Notes: GDP = gross domestic product; PPP = purchasing power parity; “Real” = adjusted for inflation.

Canada’s opposition parties also have criticized the Liberal Party government for allegedly failing
to prevent or properly respond to foreign interference in Canadian politics. Since early 2023,
Canadian press sources have published a series of reports about alleged foreign influence
operations in Canada, particularly by the People’s Republic of China (PRC, or China). The
reports spurred Parliamentary committees to investigate the allegations and led the Liberal Party
government—under political pressure—to establish an independent Public Inquiry into Foreign
Interference in Federal Electoral Processes and Democratic Institutions. In May 2024, the
commission conducting the public inquiry released an initial report.22 Among other preliminary
findings, the commission assessed that the PRC is the main perpetrator of foreign interference
20 Economist Intelligence Unit (EIU), “Jobs Market Struggles to Absorb Larger Labour Force,” June 11, 2024.
21 See, for example, “Trudeau, Poilievre Debate Inflation in Canada,” CTV News, October 24, 2023; and Brad Platt,

“Pierre Poilievre Pledges to Tie Immigration Levels to Homebuilding,” Bloomberg News, January 12, 2024.
22 Honourable Marie-Josée Hogue, Commissioner, Public Inquiry into Foreign Interference in Federal Electoral
Processes and Democratic Institutions: Initial Report, May 3, 2024.

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against Canada, and that the PRC’s activities, including the use of intimidation and
disinformation to influence diaspora communities, may have affected election results in certain
districts in 2019 and 2021.23 The commission also assessed that foreign interference did not
undermine the integrity of the electoral system or affect which political party won power at the
national level. The commission is to issue a final report by January 31, 2025.
In a December 2024 poll, 26% of Canadians asserted that they were satisfied with the Trudeau
government, and 69% asserted that they were dissatisfied.24 Under increasing pressure from
within the Liberal Party to step aside, Trudeau announced on January 6, 2025, that he would
resign once the Liberal Party selects a new leader.25 Potential candidates to succeed Trudeau
reportedly include François-Philippe Champagne, Minister of Innovation, Science and Industry;
Anita Anand, Minister of Transport and Internal Trade; Mark Carney, a former governor of the
Bank of Canada; Christy Clark, a former premier of British Columbia; and Chrystia Freeland,
whose resignation as finance minister in December 2024 helped precipitate Trudeau’s
resignation.26 The Liberal Party is scheduled to conclude a nationwide leadership vote on March
9, 2025.27
Canada’s next federal election is due by October 2025 but appears likely to occur sooner given
that Canada’s three primary opposition parties have announced plans to bring down the Liberal
Party government with a no-confidence vote once they have an opportunity to do so.28 The House
of Commons had been scheduled to return to session on January 27, 2025, but Governor General
Mary Simon granted Trudeau’s request to suspend (prorogue) Parliament until March 24, 2025.
A January 6, 2025, CBC electoral projection, based on polls conducted prior to Trudeau’s
resignation announcement, suggests that the Conservative Party is currently poised to win a
parliamentary majority in the next election. The CBC projects that the Conservative Party would
win 44% of the national popular vote and 227 seats, compared with 20% of the vote and 44 seats
for the Liberal Party, and 19% of the vote and 29 seats for the NDP. The CBC projects that the
Bloc Québécois, which competes only in Quebec, would win 37% of the provincial vote and 41
seats.29 Conservative Party leader Pierre Poilievre has yet to articulate a full campaign platform,
but he has pledged to repeal the consumer fuel charge portion of Canada’s carbon pricing system
and to cut income taxes and government expenditures.30

23 Other governments named in the report are those of Russia, India, Pakistan, and Iran.
24 The remainder did not respond or did not have an opinion. The poll was conducted from November 29 to December

1, 2024. Leger, Canadian Politics and Opinions on GST Holiday and Rebate Cheques, December 3, 2024.
25 Marie Woolf, “Atlantic Liberal Caucus Asks Trudeau to Resign and Allow Party to Replace Him,” Globe and Mail,
December 30, 2024; CBC News, “Read Prime Minister Justin Trudeau’s Resignation Speech in Full,” January 6, 2025.
26 Mickey Djuric, “Here’s Who Could Replace Justin Trudeau,” Politico Pro, January 6, 2025.
27 Liberal Party of Canada, “Liberal Party of Canada Announces Date of Leadership Vote,” January 9, 2025.
28 Racy Rafique, “Conservatives to Move Non-Confidence Motion Against Liberal Government in the New Year,”
CBC News, December 27, 2024.
29 Canadians’ remaining votes are projected to go to the Green Party (4%, 2 seats) and the right-wing People’s Party of
Canada (2%, 0 seats). CBC News, “Poll Tracker,” January 6, 2025. Projections are updated regularly at
https://newsinteractives.cbc.ca/elections/poll-tracker/canada/.
30 See, for example, Alex Ballingall and Stephanie Levitz, “Pierre Poilievre Says He’ll ‘Axe the Carbon Tax’ for
Consumers – but when It Comes to the Pricing System for Canadian Industries, He Won’t Say,” Toronto Star, May 23,
2024; and Tonda MacCharles and Alex Ballingall, “Pierre Poilivre Vows He Would Balance the Federal Budget ‘as
Soon as Possible’ – but Doesn’t Give Details About Cuts,” Toronto Star, September 27, 2024.

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Canada’s Foreign and Defense Policies
Canadian governments historically have argued that the multilateral institutions, agreements, and
standards that Canada helped establish with the United States and other allies in the aftermath of
World War II (sometimes referred to as the rules-based international order) are essential to
Canada’s physical security and economic prosperity. According to Chrystia Freeland, who served
as Canada’s minister of foreign affairs from 2017 to 2019 and deputy prime minister and finance
minister from 2019 to December 2024, “As a middle power living next to the world’s only super
power, Canada has a huge interest in an international order based on rules. One in which might is
not always right. One in which more powerful countries are constrained in their treatment of
smaller ones by standards that are internationally respected, enforced and upheld.”31 Since World
War II, Canadian governments have sought to increase their influence over the shape of the
international order by maintaining close relations with the United States, contributing to
collective security alliances like NATO, and engaging in multilateral diplomacy.
The Liberal Party government came to office pledging to reinvigorate Canada’s role in the world
and drafted a new defense policy, which asserted that defending Canada and Canadian interests
“not only demands robust domestic defense but also requires active engagement abroad.”32 A
2024 defense policy update states that Canada will prioritize efforts to assert its sovereignty over
Canadian territory—particularly in the Arctic, defend North America alongside the United States,
and make valuable contributions to allies and partners, particularly in the Euro-Atlantic and IndoPacific regions.33 To date, the Canadian government has made limited progress in meeting its
NATO defense spending commitments due its prioritization of other expenditures and difficulties
moving allocated resources through Canada’s defense procurement system.34 These defense
budget constraints have contributed to military personnel and equipment shortfalls that have
limited Canada’s ability to contribute to NATO operations and other international security
efforts.35

NATO Commitments
Canada, like the United States, was a founding member of NATO in 1949 and has been an
advocate for NATO enlargement. Since 2017, Canada has commanded a multinational NATO
battlegroup deployed to Latvia as part of the alliance’s Enhanced Forward Presence, which aims
to deter and defend against potential attacks on allies in Eastern Europe particularly vulnerable to
Russian aggression. At a June 2022 NATO summit, following Russia’s full-scale invasion of
Ukraine, Canada agreed to work with Latvia and other NATO allies to transform the battlegroup
into a “combat capable brigade.”36 That process, to be completed by 2026, includes more than
31 Government of Canada, Global Affairs Canada, “Address by Minister Freeland on Canada’s Foreign Policy

Priorities,” June 6, 2017.
32 Government of Canada, Department of National Defence and Canadian Armed Forces, Strong, Secure, Engaged:
Canada’s Defence Policy, June 2017, p. 14.
33 Government of Canada, Department of National Defence and Canadian Armed Forces, Our North, Strong and Free:
A Renewed Vision for Canada’s Defence, April 2024, pp. 1-2.
34 Catherine Lévasque, “Why Canada Keeps Missing Its NATO Spending Target – and Why Conservatives Aren’t
Promising to Meet It,” National Post, July 14, 2023.
35 See, for example, Lee Berthiaume, “Canadian Frigates Missing from NATO Naval Forces for First Time Since
2014,” Canadian Press, August 8, 2022; and Steven Chase, “Trudeau Hedges on Military Mission to Haiti, Supply of
Soldiers,” Globe and Mail, January 12, 2023.
36 Government of Canada, Department of National Defence, “Canada and Latvia Sign Joint Declaration to Augment
NATO’s Enhanced Forward Presence Latvia,” press release, June 29, 2022.

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doubling the size of the force (to more than 3,500 troops, including 2,200 continuously deployed
Canadian Armed Forces personnel), expanding necessary military infrastructure, and procuring
and deploying additional equipment and systems.37 In July 2023, Prime Minister Trudeau
announced a three-year, C$2.6 billion (about $1.9 billion) renewal and expansion of Canada’s
Operation REASSURANCE, which includes the deployment to Latvia as well as contributions to
NATO air and maritime activities in Europe on a rotating basis.38
According to NATO estimates, Canada spent the equivalent of 1.37% of GDP on defense in 2024.
That figure is an increase from 1.01% of GDP in 2014—the year before the Liberal Party
government took office—but is below the 2% of GDP guideline that Canada and other NATO
allies committed to reaching by 2024. Canada is one of two allies (along with Belgium) that is
also falling short of the NATO guideline to devote at least 20% of defense spending to
procurement and modernization; Canada allocated an estimated 18.6% of its defense expenditures
to equipment in 2024.39 At the July 2024 NATO Summit, Prime Minister Trudeau announced that
Canada expects to meet NATO’s 2% of GDP guideline by 2032.40 Canada’s independent Office of
the Parliamentary Budget Officer forecasts that Canada’s announced defense plans would bring
defense expenditures to 1.58% of GDP in the 2029-2030 fiscal year, leaving the country with a
significant shortfall to address over the following three fiscal years.41 Conservative Party leader
Pierre Poilievre has not committed to reaching the 2% of GDP target should he become prime
minister, stating that he would need to assess Canada’s fiscal situation.42
Canadian government officials note that Canada has doubled its defense spending over the past
decade (not adjusting for inflation) and that its absolute defense expenditures are the seventhhighest within the NATO alliance.43 Among other planned investments, the Canadian government
is purchasing new fighter aircraft and surface combat ships from Lockheed Martin and exploring
opportunities for expanding and renewing its submarine fleet.44 Some of this equipment is not
expected to be delivered until the 2030s, and years of recruitment and retention challenges,
deferred maintenance, and delayed procurements have eroded Canada’s military capacity.45
During Canada’s 2023-2024 fiscal year, the Canadian Armed Forces was about 14,500 troops
(14%) below its authorized force strength, and Canada’s Department of National Defence

37 Government of Canada, Department of National Defence, “Roadmap – Scaling the EFP Latvia Battle Group to

Brigade,” July 11, 2023; and Government of Latvia, National Armed Forces, “Ribbon-Cutting Ceremony of the NATO
Multinational Brigade Infrastructure to Take Place at Military Base ‘Ādaži,’” August 28, 2024.
38 Prime Minister of Canada, “Prime Minister Increases Support for Key NATO Presence,” July 10, 2023.
39 NATO, “Defence Expenditure of NATO Countries (2014-2024),” June 17, 2024.
40 Prime Minister of Canada Justin Trudeau, “Prime Minister Strengthens Defence and Security Partnerships at the
NATO Summit,” July 11, 2024.
41 Christopher Penney, The Fiscal Implications of Meeting the NATO Military Spending Target, Government of
Canada, Office of the Parliamentary Budget Officer, October 30, 2024.
42 Peter Zimonijic, “Poilievre Won’t Commit to NATO 2% Target, Says He’s ‘Inheriting a Dumpster Fire’ Budget
Balance,” CBC News, July 12, 2024.
43 NATO, “Defence Expenditure of NATO Countries (2014-2024),” June 17, 2024; and CRS meetings with Canadian
officials at the Department of National Defence and Global Affairs Canada, September 2024.
44 For information on Canada’s defense procurement projects, see Government of Canada, “Defence Equipment
Purchases and Upgrades,” October 21, 2024, https://www.canada.ca/en/services/defence/defence-equipment-purchasesupgrades.html.
45 Philippe Lagassé and Justin Massie, “Don’t Count on Us: Canada’s Military Unreadiness,” War on the Rocks, April
11, 2024.

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assessed that about 54% of Canada’s naval fleet, 51% of its air force fleet, and 51% of its army
land fleet was not in condition to be used for operations or training.46
Some Members of Congress have expressed disappointment in Canada’s failure to meet the
NATO defense spending guideline and have urged the Canadian government to accelerate its
defense expenditures to ensure it can meet its obligations to the alliance.47 A provision of the
National Defense Authorization Act for Fiscal Year 2024 (NDAA, P.L. 118-31) directs the
Secretary of Defense to take into consideration whether or not a country has met the NATO
defense spending guideline when making decisions related to U.S. military basing, training, and
exercises.48

Support for Ukraine
Canada has provided a range of military and other support to Ukraine since Russia seized Crimea
in 2014. Under Operation UNIFIER, launched in 2015, the Canadian Armed Forces have trained
more than 43,000 Ukrainian military personnel in a range of basic and advanced military skills.49
Although the Canadian Armed Forces suspended training operations in Ukraine after Russia’s
2022 invasion, they are now training Ukrainian troops in the UK, Poland, and Latvia. Since
February 2022, Canada has committed to providing more than C$4.5 billion ($3.3 billion) in
military assistance to Ukraine, with deliveries scheduled to continue through 2028.50 To
demonstrate Canada’s longer-term support for Ukraine, Prime Minister Trudeau and Ukrainian
President Volodymyr Zelenskyy signed a 10-year bilateral security cooperation agreement in
February 2024.51 Canada also supported the establishment of NATO Security Assistance and
Training for Ukraine, a new command announced at the July 2024 NATO Summit that is intended
to coordinate allies’ long-term security assistance for Ukraine. Pierre Poilievre has asserted that a
Conservative Party government would “continue to support Ukraine in its defense against
Russia’s illegal invasion,” but he has not committed to honoring the security cooperation
agreement signed by Trudeau.52
In addition to military support, Canada has committed C$12.4 billion ($9.1 billion) in loans and
other economic assistance, C$652 million ($479 million) in development and stabilization
assistance, and C$358.2 million ($263 million) in humanitarian assistance for Ukraine.53 As of
April 2024, Canada also had approved emergency temporary resident visas for more than 963,000
Ukrainians, some 298,000 of whom had arrived in Canada to join the approximately 1.4 million

46 Government of Canada, Department of National Defence and Canadian Armed Forces, 2023-24 Departmental

Results Report, December 23, 2024, pp. 26 and 36.
47 See, for example, Letter from Sen. Jeanne Shaheen, Sen. Thom Tillis, and Sen. Benjamin L. Cardin et al. to
Honourable Justin Trudeau, Prime Minister, May 23, 2024, https://www.romney.senate.gov/wp-content/uploads/2024/
05/shaheen-tillis_canada_defense_spending_letter.pdf.
48 P.L. 118-31, §1250; 10 U.S.C. §113 note.
49 Government of Canada, Department of National Defence, “Operation UNIFIER,” November 20, 2024.
50 Government of Canada, Department of National Defence, “Canadian Donations and Military Support to Ukraine,”
November 7, 2024.
51 Government of Canada, Global Affairs Canada, “Agreement on Security Cooperation Between Canada and
Ukraine,” February 26, 2024.
52 “Pierre Poilievre’s Conservatives Say They Support Ukraine – but Won’t Commit to Keeping Justin Trudeau’s
Latest Agreement with Kyiv,” Toronto Star, February 27, 2024.
53 Government of Canada, Global Affairs Canada, “Economic, Humanitarian and Development Assistance, and
Security and Stabilization Support—Russia’s Invasion of Ukraine,” September 9, 2024.

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Ukrainian-Canadians in the country prior to Russia’s full-scale invasion.54 Similar to U.S. and
European allies, Canada has restricted transactions with Russia’s financial and energy sectors, and
imposed visa and financial sanctions on 1,509 Russian individuals and 646 Russian entities that
are connected to Russia’s war on Ukraine.55

Relations with the People’s Republic of China and the Indo-Pacific
After taking office in 2015, the Liberal Party government initially sought to strengthen ties with
the People’s Republic of China, in part to reduce Canada’s economic dependence on the United
States.56 Canada-PRC ties have deteriorated since December 2018, when Canada arrested Meng
Wanzhou, an executive at the Chinese technology company Huawei, to comply with an
extradition request from the United States. In apparent retaliation for Meng’s arrest, the PRC
detained two Canadians, Michael Kovrig and Michael Spavor, holding them for nearly three
years. In September 2021, the PRC released the “two Michaels,” as they are widely known, hours
after Meng reached a deferred prosecution agreement with U.S. prosecutors that allowed her to
return to China. Relations have continued to decline as Canada has investigated alleged PRC
activities inside Canada, including industrial espionage, intimidation of human rights activists and
other dissidents within diaspora communities, and interference in Canadian politics (discussed
above).57
Canadian criticism of the PRC’s human rights record also has contributed to bilateral tensions. In
May 2020, Canada joined the United States, the UK, and Australia to express “deep concern”
about China’s decision to impose a new national security law on Hong Kong.58 Since then,
Canada has suspended its extradition treaty with Hong Kong, placed restrictions on sensitive
exports to Hong Kong, and created new pathways to permanent residence in Canada to facilitate
the immigration of Hong Kong residents. Canadian officials also have expressed concerns about
the PRC’s treatment of Uyghurs and other Turkic Muslims in northwest China’s Xinjiang region,
which the House of Commons unanimously recognized as “genocide” in February 2021.59 The
PRC responded by accusing the House of Commons of having “deliberately smeared China” and
“grossly interfered in China’s internal affairs.”60
In November 2022, Canada released an Indo-Pacific Strategy describing the PRC as an
“increasingly disruptive global power” that disregards international rules and norms and is
seeking to shape the international order “into a more permissive environment for interests and

54 Government of Canada, Immigration, Refugees and Citizenship Canada, “Canada-Ukraine Authorization for

Emergency Travel: Key Figures,” July 26, 2024; and Max Stick and Feng Hou, “A Sociodemographic Profile of
Ukrainian-Canadians,” Statistics Canada, April 28, 2022.
55 Canada also has imposed sanctions on 483 individuals and 60 entities in Ukraine, 221 individuals and 77 entities in
Belarus, and 16 individuals and 7 entities in Moldova tied to the Russian invasion. Government of Canada, Global
Affairs Canada, “Sanctions—Russian Invasion of Ukraine,” December 10, 2024.
56 Prime Minister of Canada Justin Trudeau, “Joint Statement Between Canada and the People’s Republic of China,”
September 23, 2016; and Government of Canada, Department of Finance, Investing in Middle Class Jobs, Fall
Economic Statement 2018, pp. 63-65, November 21, 2018.
57 See, for example, Royal Canadian Mounted Police, “Hydro-Québec Employee Charged with Espionage,” November
14, 2022; and House of Commons of Canada, Special Committee on the Canada-People’s Republic of China
Relationship, The Chinese Communist Party’s Overseas Police Stations, interim report, November 2023.
58 U.S. Department of State, Office of the Spokesperson, “Joint Statement on Hong Kong,” May 28, 2020.
59 Parliament of Canada, House of Commons of Canada, Vote No. 56, 43 rd Parl., 2nd sess., February 22, 2021.
60 Ministry of Foreign Affairs of the People’s Republic of China, “Foreign Ministry Spokesperson Wang Wenbin’s
Regular Press Conference on February 23, 2021,” February 24, 2021.

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values that increasingly depart from [those of Canada].”61 The strategy calls for Canada to
increase its diplomatic, economic, and military engagement in the Indo-Pacific region and to push
back against PRC behaviors that undermine international norms, such as arbitrary detentions,
economic coercion, and actions that threaten the status quo in the Taiwan Strait.
The Canadian government has allocated C$2.3 billion ($1.7 billion) for the first five years of the
strategy’s implementation. Among other initiatives, Canada has concluded a trade agreement with
Indonesia, forged new defense and intelligence partnerships throughout the region, and deployed
three frigates each year (up from two previously) to maintain a near constant presence in the
Indo-Pacific.62 These Canadian frigates occasionally have participated in the U.S. Navy’s routine
transits through the Taiwan Strait.
Canada has faced some setbacks in advancing its Indo-Pacific strategy. Bilateral relations with
India—which the strategy characterizes as a critical partner for achieving Canada’s objectives in
the region—have deteriorated amid Canadian government allegations that agents of the
government of India have engaged in acts of transnational repression, including murder, inside
Canada.63 Canada also has been unsuccessful to date in its efforts to join the Australia, UK,
United States (AUKUS) security pact for the Indo-Pacific, launched in September 2021, or the
Indo-Pacific Economic Framework for Prosperity (IPEF), launched by the United States and 13
regional partners in May 2022.64
In addition to setting objectives in the region, Canada’s Indo-Pacific Strategy states that Canada
will take steps domestically to defend against PRC economic coercion and foreign interference.
Among other actions, the Canadian government has prohibited Canadian telecommunications
providers from using products or services from Chinese firms like Huawei and ZTE in their fifth
generation (5G) networks; restricted investment by foreign state-owned enterprises in Canada’s
critical minerals sector; and imposed tariffs on electric vehicles, steel, and aluminum imports
from China (see “PRC Automotive Imports and Investments”).65 The Canadian government also
has enacted legislation intended to combat foreign interference by creating new criminal offenses,
providing additional powers to the Canadian Security Intelligence Service, and establishing a

61 Government of Canada, Global Affairs Canada, Canada’s Indo-Pacific Strategy, 2022, p. 10.
62 Government of Canada, Global Affairs Canada, Canada’s Indo-Pacific Strategy, 2022 to 2023 Implementation

Update, 2024; and Government of Canada, Global Affairs Canada, “Joint Statement by the Government of the
Republic of Indonesia and the Government of Canada on the Conclusion of the Negotiations of the Indonesia-Canada
Comprehensive Economic Partnership Agreement,” December 2, 2024.
63 Prime Minister of Canada Justin Trudeau, “Statement by the Prime Minister on the Ongoing Investigation on Violent
Criminal Activity Linked to the Government of India,” October 14, 2024. Also see CRS Insight IN12292, Alleged
Indian Role in Transnational Assassination Plots, by K. Alan Kronstadt.
64 Tim Kelly, “Canada in Talks About Joining Expanded AUKUS, Defence Chief Blair Says,” Reuters, September 13,
2024; and Margaret Spiegelman, “Canada Remains Committed to IPEF – and Still Outside Looking In,” Inside U.S.
Trade, November 9, 2023. Also see CRS In Focus IF12373, Indo-Pacific Economic Framework for Prosperity (IPEF),
by Cathleen D. Cimino-Isaacs, Kyla H. Kitamura, and Mark E. Manyin, and CRS Report R47599, AUKUS Pillar 2
(Advanced Capabilities): Background and Issues for Congress, by Luke A. Nicastro.
65 Government of Canada, Innovation, Science and Economic Development Canada, “Policy Statement – Securing
Canada’s Telecommunications System,” May 19, 2022; Government of Canada, Innovation, Science and Economic
Development Canada, “Policy Regarding Foreign Investments from State-Owned Enterprises in Critical Minerals
under the Investment Canada Act,” October 28, 2022; Government of Canada, Department of Finance Canada,
“Canada Implementing Measures to Protect Canadian Workers and Key Economic Sectors from Unfair Chinese Trade
Practices,” press release, August 26, 2024.

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foreign agent registry.66 Canada’s Conservative Party had advocated for many of these policies
before they ultimately were adopted.67
Congress has demonstrated interest in coordinating with Canada on approaches to the IndoPacific and China. For example, a provision of the Servicemember Quality of Life Improvement
and National Defense Authorization Act for Fiscal Year 2025 (P.L. 118-159; FY2025 NDAA)
expresses the sense of Congress that the Secretary of Defense should collaborate with Canada and
other NATO allies to build connectivity and advance a shared vision for the Indo-Pacific.68 In
September 2023, the Congressional-Executive Commission on China invited Canadian Member
of Parliament Michael Chong to testify at a hearing on “Countering China’s Global Transnational
Repression Campaign.”69 The commission’s chairs also have called for enhanced coordination
with Canada (and Mexico) to prevent the importation into North America of goods made with
forced labor, citing P.L. 117-78, commonly known as the Uyghur Forced Labor Prevention Act,
as a potential model.70

Arctic Policy71
With 40% of its land mass and 75% of its coastline located in the Arctic, Canada has substantial
interests in the changing region.72 Temperatures in the Arctic have warmed nearly four times
faster than the global average since 1979.73 The resulting decline in sea ice is gradually opening
the region to increased shipping, tourism, and resource extraction, among other activities.
Although these changes may provide commercial opportunities for Arctic countries and
communities, they also present new challenges, ranging from environmental degradation to
increased geopolitical competition.74
Canada traditionally has viewed the Arctic as a region of international cooperation. It was one of
the founding members of the Arctic Council, which brings together the eight Arctic states, six
organizations representing Indigenous peoples, and various observers to promote cooperation on
sustainable development and environmental protection.75 Under the auspices of the council, the
66 Parliament of Canada, Bill C-70, https://www.parl.ca/documentviewer/en/44-1/bill/C-70/royal-assent.
67 See, for example, Parliament of Canada, House of Commons of Canada, “Vote No. 23,” 43 rd Parl., 2nd sess.,

November 18, 2020, https://www.ourcommons.ca/members/en/votes/43/2/23; and House of Commons of Canada,
Standing Committee on Natural Resources, Conservative Dissenting Report – From Mineral Exploration to Advanced
Manufacturing: Developing Value Chains for Critical Minerals in Canada, June 2021.
68 P.L. 118-159, §1311.
69 U.S. Congress, Joint Congressional-Executive Commission on China, Countering China’s Global Transnational
Repression Campaign, 118th Cong., 1st sess., September 12, 2023.
70 Letter from Rep. Chris Smith, chair, and Sen. Jeff Merkley, cochair, Congressional-Executive Commission on China
et al. to Honorable Katherine Tai, United States Trade Representative, Secretary Raquel Buenrostro, Mexican
Secretariat of Economy, and Honourable Mary Ng, Canadian Minister of Export Promotion, September 18, 2024,
https://www.cecc.gov/sites/evo-subsites/www.cecc.gov/files/2024-09/
USMCA%20Trade%20Ministers%209.17.24.pdf.
71 Caitlin Keating-Bitonti, CRS Specialist in Natural Resources Policy, contributed to this section. For more
information on Arctic issues and U.S. policy in the Arctic, see CRS Report R41153, Changes in the Arctic:
Background and Issues for Congress, coordinated by Ronald O'Rourke.
72 Government of Canada, Canada’s Arctic and Northern Policy Framework, 2019, p. 81.
73 Mika Rantanen et al., “The Arctic Has Warmed Nearly Four Times Faster than the Globe Since 1979,”
Communications Earth & Environment, vol. 3 (August 11, 2022).
74 For additional information, see CRS Report R41153, Changes in the Arctic: Background and Issues for Congress,
coordinated by Ronald O'Rourke.
75 The other Arctic states are the United States, Denmark (due to Greenland), Iceland, Norway, Sweden, Finland, and
Russia.

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Arctic states have negotiated three binding instruments: a 2011 Agreement on Cooperation on
Aeronautical and Maritime Search and Rescue in the Arctic, a 2013 Agreement on Cooperation
on Marine Oil Pollution Preparedness and Response in the Arctic, and a 2017 Agreement on
Enhancing International Arctic Scientific Cooperation.76 Russia’s war against Ukraine has
affected the Arctic Council’s functioning, however, and raised questions about its future. Canada
has participated in some multilateral negotiations on Arctic matters outside the council, including
talks that resulted in a 2018 Agreement to Prevent Unregulated High Seas Fisheries in the Central
Arctic Ocean.77
At the same time, Canada has sought to defend its sovereignty in the Arctic. In 2019, for example,
Canada filed a submission with the UN Commission on the Limits of the Continental Shelf to
establish the outer limits (i.e., beyond 200 nautical miles of shoreline) of its juridical continental
shelf (commonly known as the extended continental shelf) for the purpose of exploring it and
exploiting its natural resources. In total, Canada’s submission includes 1.2 million square
kilometers of the Arctic seafloor, including the North Pole.78 The submission, based on scientific
data, overlaps in some areas with other Arctic states’ continental shelves, including those of
Russia and Denmark.79 The U.S. extended continental shelf, as announced by the U.S. State
Department in December 2023, also overlaps with Canada’s submission.80 Canada has pledged to
resolve such overlaps “peacefully and in accordance with international law.”81 To date, the
Commission on the Limits of the Continental Shelf has not offered a recommendation on
Canada’s submission in respect of the Arctic Ocean.82
In September 2024, Canada and the United States announced the creation of a joint task force to
negotiate an unresolved maritime boundary in the Beaufort Sea, located between Alaska and
Canada’s High Arctic islands.83 The disputed boundary stems from differing legal interpretations
of an 1825 treaty between Russia and the UK, the rights of which were inherited, respectively, by
the United States and Canada. The U.S. and Canadian governments last sought to negotiate the
boundary in the late 1970s, spurred by the potential for offshore oil and gas. Those talks
76 All three agreements are available at https://arctic-council.org/en/explore/work/cooperation/.
77 The 2018 Agreement to Prevent Unregulated High Seas Fisheries in the Central Arctic Ocean, which entered into

force in June 2021, is available at https://www.dfo-mpo.gc.ca/international/agreement-accord-eng.htm.
78 Government of Canada, Global Affairs Canada, “Canada Marks Major Milestone in Defining Its Continental Shelf in
Arctic Ocean,” press release, May 23, 2019; and United Nations Commission on the Limits of the Continental Shelf
(CLCS), “Outer Limits of the Continental Shelf Beyond 200 Nautical Miles from the Baselines, Submissions to the
Commission: Partial Submission by Canada,” June 28, 2024, https://www.un.org/depts/los/clcs_new/submissions_files/
submission_can1_84_2019.html.
79 In December 2022, the Canadian government filed an addendum to its original submission in response to a March
2021 Russian addendum that “greatly expanded the size” of Russia’s continental shelf and “tripled the area that
overlaps” with Canada’s continental shelf. Government of Canada, Global Affairs Canada, Canada’s Arctic Foreign
Policy, December 6, 2024, https://www.international.gc.ca/gac-amc/publications/transparency-transparence/arcticarctique/arctic-policy-politique-arctique.aspx?lang=eng. Hereinafter, Canada’s Arctic Foreign Policy, 2024.
80
U.S. Department of State, The Outer Limits of the Extended Continental Shelf of the United States of America:
Executive Summary, December 19, 2023, pp. 13 and 19. For more information, see CRS Report R47912, Outer Limits
of the U.S. Extended Continental Shelf: Background and Issues for Congress, by Caitlin Keating-Bitonti.
81 Canada’s Arctic Foreign Policy, 2024.
82 CLCS, “Submissions, Through the Secretary-General of the United Nations, to the Commission on the Limits of the
Continental Shelf, Pursuant to Article 76, Paragraph 8, of the United Nations Convention on the Law of the Sea of 10
December 1982,” October 7, 2024, https://www.un.org/depts/los/clcs_new/commission_submissions.htm.
Recommendations made by the CLCS are “final and binding” (see Article 76, paragraph 8 of United Nations
Convention on the Law of the Sea).
83 U.S. Department of State, “Joint Statement on Creation of Joint Task Force to Negotiate Beaufort Sea Boundary,”
September 24, 2024.

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ultimately stalled due to differing U.S. and Canadian government views over whether or not to
include the countries’ other unresolved maritime boundaries in the scope of the negotiations.84
Canada’s government also continues to argue that the various channels that pass through the
country’s 36,000-island Arctic Archipelago, commonly referred to as the Northwest Passage, are
internal waters subject to Canadian control.85 The United States, the European Union (EU), and
others maintain the Northwest Passage is an international strait through which foreign vessels
have a right to transit. The U.S.-Canada dispute over the passage has been mostly dormant since
1988, when the United States pledged that all navigation by U.S. icebreakers through the passage
would be undertaken with the consent of the Canadian government and Canada agreed to
facilitate such navigation.86
Exercising effective control over the Canadian Arctic has become more difficult as access to, and
interest in, the region has grown. Canada asserts that it has observed a general increase in Arctic
maritime activity, which has included regular deployments of dual use (i.e., civilian and military)
PRC research vessels and surveillance platforms to the region.87 In November 2022, the auditor
general of Canada reported that “the federal organizations that are responsible for safety and
security in the Arctic region do not have full awareness of maritime activities in Arctic waters and
are not ready to respond to increased surveillance requirements.”88 This is reportedly due to
incomplete surveillance, insufficient data and information sharing, and outdated equipment.
To bolster its presence in the Arctic, Canada has begun upgrading infrastructure and procuring
new equipment, including ice breakers, offshore patrol vessels, and fighter and patrol aircraft.
Canada is also coordinating with the United States to enhance Arctic defenses as part of the
ongoing modernization of NORAD (see “NORAD”), and collaborating with the United States
and Finland on the production of new polar icebreakers and other Arctic capabilities.89 Canada’s
Arctic Foreign Policy, released in December 2024, also calls for increased information sharing
with NATO allies and continued cooperation with northern Indigenous Peoples and territorial and
provincial governments to enhance domain awareness.90

U.S.-Canada Relations
In February 2021, President Biden and Prime Minister Trudeau announced the Roadmap for a
Renewed U.S.-Canada Partnership, which pledged to revitalize and expand bilateral relations.91
84 The United States and Canada have four unresolved (or partially resolved) maritime boundaries within 200 nautical

miles of their shores in the Beufort Sea, the Gulf of Maine, and two areas off the Pacific Coast: the Juan de Fuca Strait
(located offshore of Washington and Vancouver Island, Canada) and the Dixon Entrance (located offshore of
southeastern Alaska and British Columbia, Canada). Michael Byers and Andreas Østhagen, “Why Does Canada Have
So Many Unresolved Maritime Boundary Disputes?,” The Canadian Yearbook of International Law, vol. 54 (2017).
The countries also have two unresolved boundaries beyond 200 nautical miles (in the Arctic and northern Atlantic
regions). U.S. Department of State, The Outer Limits of the Extended Continental Shelf of the United States of America:
Executive Summary, December 19, 2023, pp. 13, 19, and 25.
85 Canada’s Arctic Foreign Policy, 2024.
86 Agreement Between the Government of Canada and the Government of the United States of America on Arctic
Cooperation, January 11, 1988, https://www.treaty-accord.gc.ca/text-texte.aspx?id=101701.
87 Canada’s Arctic Foreign Policy, 2024.
88 Office of the Auditor General of Canada, Arctic Waters Surveillance, November 15, 2022, p. 7.
89 White House, “Biden-Harris Administration Announces New Polar Partnership ‘ICE Pact’ Alongside Finland and
Canada,” press release, July 11, 2024.
90 Canada’s Arctic Foreign Policy, 2024.
91 White House, “Roadmap for a Renewed U.S.-Canada Partnership,” February 23, 2021.

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U.S.-Canada ties had been strained in the preceding four years as the countries adopted divergent
approaches to a range of issues and the Trump Administration challenged many long-standing
pillars of the bilateral relationship, including common commitments to NATO and to free trade in
North America.92 Although some policy disagreements have persisted since the launch of the
roadmap (see “Trade and Investment Issues” and “Cross-Border Energy Infrastructure Disputes”),
the U.S. and Canadian governments have taken steps to modernize NORAD, strengthen crossborder law enforcement, and accelerate the deployment of low-carbon technologies, among other
ongoing areas of cooperation (see “Security Cooperation” and “Climate Change Collaboration”).
During a March 2023 speech to the Canadian Parliament, President Biden asserted that “no two
nations on Earth are bound by such close ties” and assured Canadians they would “always be able
to count on the United States of America.”93
Bilateral relations are entering a renewed era of uncertainty after Donald Trump’s November
2024 election to a second term. During the presidential campaign, Trump asserted that he would
not defend NATO allies that did not dedicate sufficient resources to defense, and proposed a
minimum 10% tariff on all U.S. imports.94 During the presidential transition, President-elect
Trump threatened to impose a blanket 25% tariff on all imports from Canada until the Canadian
government takes unspecified actions to combat cross-border flows of illicit narcotics and
migrants.95 (For information on such flows, see “Border Issues.”) Potential disruptions to U.S.Canada trade are viewed as a major threat to the Canadian economy by many in Canada given
Canada’s deep economic integration with the United States (see “Trade and Investment Issues”).96
Prime Minster Trudeau reportedly has sought to engage with President-elect Trump on ways the
United States and Canada can work together to address shared challenges while not ruling out
potential retaliatory measures.97 Trudeau also has reestablished a cabinet committee on CanadaU.S. relations to focus on critical bilateral issues.
In a December 2024 poll, 72% of Canadians reported they were “pessimistic and worried” about
the next four years with Trump’s anticipated return to the U.S. presidency.98 Some 76% of those
surveyed asserted that they expect a second Trump Administration will hurt Canada’s economy,
65% asserted that it will hurt global peace and stability, and 50% asserted that it will hurt
Canada’s overall security in the world. In the face of potential U.S. tariffs, 49% of Canadians
argued that the Canadian government should “play hardball” and not allow Canada to “be
bullied,” 33% contended that Canada should try to negotiate with President-elect Trump, and
10% maintained that Canada should concede to U.S. demands to avoid tariffs. At the same time,
54% of those surveyed asserted that Canada needs to do more to secure its border with the United

92 See, for example, Arthur Beesly, Alex Barker, and Demetri Sevastopulo, “Donald Trump Fails to Endorse NATO’s

Mutual Defence Pledge,” Financial Times, May 25, 2017; and Heather Long, “Trump Threatens to Leave Canada
Behind on NAFTA, Warns Congress Not to ‘Interfere,’” Washington Post, September 1, 2018.
93 White House, “Remarks by President Biden in Address to the Canadian Parliament,” March 24, 2023.
94 Meg Kinnard and Michelle L. Price, “Donald Trump Stands by Remarks About Not Defending NATO Members
After Backlash,” Associated Press, February 14, 2024; and “Read the Full Transcripts of Donald Trump’s Interviews
with TIME,” TIME, April 30, 2024.
95 Jill Colvin and Rob Giles, “Trump Threatens to Impose Sweeping New Tariffs on Mexico, Canada and China on
First Day in Office,” Associated Press, November 26, 2024.
96 CRS meetings with Canadian government officials and private sector stakeholders, September 2024; and Statistics
Canada data, reported by Trade Data Monitor, accessed November 13, 2024.
97 Mickey Djuric, “Trump 2.0 Offers Trudeau a Make-or-Break Moment,” Politico Pro, November 28, 2024; and Sue
Allan and Mickey Djuric, “What Trudeau Told Trump at Mar-a-Lago,” Politico Pro, December 1, 2024.
98 Angus Reid Institute, “Tariffs, Border Demands & Defence: Half of Canadians Say This Country Should Play
Hardball Against Trump’s Threats,” December 5, 2024.

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States and 51% asserted that Canada is moving too slowly to meet its NATO defense spending
commitment.99

Security Cooperation
According to the U.S. State Department, “U.S. defense arrangements with Canada are more
extensive than with any other country.”100 In addition to their mutual defense commitments under
NATO and close intelligence partnership as members of the Five Eyes alliance, the United States
and Canada cooperate on continental defense through NORAD and coordinate extensively on law
enforcement matters (see “NORAD” and “Border Issues”).
The U.S. and Canadian defense industries are also highly integrated. Congress has designated
Canadian individuals and organizations as part of the National Technology and Industrial Base
(10 U.S.C. §4801) and has designated Canadian firms as “domestic sources” for the purposes of
the Defense Production Act of 1950 (50 U.S.C. §§4501 et seq.).101 Likewise, Congress granted
special treatment to Canada under the Arms Export Control Act of 1976 (22 U.S.C. §§2751 et
seq.), reflected in the International Traffic in Arms Regulations, which provide licensing
requirement exemptions for some—but not all—U.S. defense exports to Canada and temporary
U.S. defense imports from Canada (22 C.F.R. §126.5).

NORAD
NORAD, established in 1958, is charged with monitoring all aerial and maritime threats to the
United States and Canada and defending North American airspace. NORAD is unique in the
world as a binational command that has a U.S. Commander and a Canadian Deputy Commander
who are appointed by, and responsible to, both the U.S. President and the Canadian Prime
Minister. Likewise, NORAD headquarters at Peterson Space Force Base in Colorado is composed
of integrated staff from both countries. This binational structure allows the United States and
Canada to pool resources, avoiding duplication of some efforts and increasing North America’s
overall defense capabilities. Nevertheless, because the U.S. and Canadian governments want to
maintain their abilities to take unilateral action, some NORAD responsibilities and authorities
overlap with those of U.S. Northern Command and Canadian Joint Operations Command.
In 2021, the United States and Canada issued a joint statement on NORAD modernization. The
statement recognized the challenges posed by “growing strategic competition, rapid
advancements in technology, and ongoing changes in climate” and asserted that NORAD must be
able to detect and identify threats earlier and respond to them faster and more decisively.102 The
countries identified several priority areas for new investments, including situational awareness,
especially in the northern and maritime regions of North America; modernized command and
control systems; improved capabilities to deter and defeat evolving aerospace threats; and
research and development.
In 2022, the Canadian government announced plans to invest C$4.9 billion (about $3.6 billion)
over six years and C$38.6 billion (about $28.4 billion) over 20 years to modernize NORAD’s
99 Ibid.
100 U.S. Department of State, Bureau of Western Hemisphere Affairs, “U.S. Relations with Canada,” August 19, 2022.
101 For more information on the National Technology and Industrial Base and the Defense Production Act, see CRS In

Focus IF11311, Defense Primer: The National Technology and Industrial Base, by Luke A. Nicastro; and CRS Report
R43767, The Defense Production Act of 1950: History, Authorities, and Considerations for Congress, by Alexandra G.
Neenan and Luke A. Nicastro.
102 U.S. Department of Defense (DOD), “Joint Statement on NORAD Modernization,” August 17, 2021.

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capabilities.103 The funding is to be allocated to five broad priorities: surveillance systems,
modern technology, air weapons systems, infrastructure and support capabilities, and science and
technology. Among other expenditures, Canada has committed to procuring two next-generation
over-the-horizon radar systems to enhance early warning and domain awareness of the Arctic
approaches to North America. Canada also has committed to upgrading infrastructure at bases
across the country, including four forward operating locations in the north, to support the arrival
of Canada’s new fleet of 88 F-35 Joint Strike Fighters and meet other Canadian, U.S., and
NORAD military requirements.104 Nevertheless, over the past two years, Canada has fallen short
of meeting all of its NORAD commitments and obligations, partly due to equipment maintenance
requirements and personnel shortages that have hindered Canada’s ability to deploy aircraft and
staff NORAD positions.105
Historically, NORAD has been funded through a 60% to 40% split between the United States and
Canada.106 It is not possible to compare the countries’ current contributions, however, since the
U.S. Department of Defense (DOD) budget does not designate a specific funding level for
NORAD operations or modernization. Although the DOD budget includes funding for military
systems that may support NORAD once fielded, DOD does not procure those systems solely for
NORAD. In March 2024 written testimony to Congress, General Gregory M. Guillot, the
Commander of NORAD and U.S. Northern Command, called for continued investments in overthe-horizon radar and an integrated undersea surveillance system, among other capabilities
intended to enhance air and maritime domain awareness and limit competitors’ abilities to
“approach North America undetected.”107
Congress has placed increased focus on continental defense issues since early 2023, when a highaltitude balloon passed over North America allegedly surveilling strategic sites for the PRC.108
The 118th Congress adopted resolutions condemning the PRC’s use of a high-altitude surveillance
balloon over U.S. territory (H.Res. 104 and S.Res. 66) and held several hearings to examine
NORAD’s response to the incident and assess NORAD’s capabilities and funding
requirements.109 S.Rept. 118-81, incorporated into the explanatory statement accompanying the
103 The C$38.6 billion commitment is on an “accrual basis,” which records the cost of acquiring an asset when it is put

into service and spread over its useful life rather than the year the payments are made. For information on planned
investments and timelines, see Government of Canada, Department of National Defence, “NORAD Modernization
Project Timelines,” fact sheet, March 24, 2023, https://www.canada.ca/en/department-national-defence/services/
operations/allies-partners/norad/norad-modernization-project-timelines.html.
104 Canada has participated in the U.S.-led F-35 Joint Strike Fighter program since 1997 but did not conclude its
advanced fighter procurement process until January 2023. Canada allocated C$19 billion ($14 billion) for the aircraft,
sustainment, and associated equipment and facilities. The 88 F-35s are to be delivered to Canada between 2026 and
2032. Government of Canada, Department of National Defence; “Announcement Regarding the F-35 Acquisition,”
January 9, 2023.
105 Government of Canada, Department of National Defence and Canadian Armed Forces, 2023-24 Departmental
Results Report, December 23, 2024, p. 12.
106
CRS communication with NORAD, May 17, 2023.
107 General Gregory M. Guillot, Commander, United States Northern Command and North American Aerospace
Defense Command, “Statement Before the Senate Armed Services Committee,” March 14, 2024, p. 12.
108 Jim Garamone, “F-22 Safely Shoots Down Chinese Spy Balloon off South Carolina Coast,” DOD News, February 4,
2023.
109 See, for examples, U.S. Congress, Senate Committee on Appropriations, The People’s Republic of China’s High
Altitude Surveillance Efforts Against the United States, 118th Cong., 1st sess., February 9, 2023; House Committee on
Armed Services, Security Challenges in North and South America, 118th Cong., 1st sess., March 8, 2023; and Senate
Committee on Armed Services, Subcommittee on Strategic Forces, To Receive Testimony on the Department of
Defense Missile Defense Activities in Review of the Defense Authorization Request for Fiscal Year 2024 and the Future
Years Defense Program, 118th Cong., 1st sess., May 9, 2023.

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Department of Defense Appropriations Act, 2024 (P.L. 118-47, Division A), recommended
additional funding to accelerate the deployment of several radar and sensor systems intended to
improve homeland defense capabilities and ensure similar incidents do not occur in the future.110

Border Issues
The United States and Canada coordinate extensively on efforts to secure their shared 5,525-mile
border. The 2011 Beyond the Border declaration and action plan have provided the framework for
bilateral cooperation, including efforts to address potential threats, facilitate legal commercial and
passenger traffic, enhance cross-border law enforcement cooperation, and strengthen and protect
critical infrastructure.111 The declaration and action plan have resulted in several initiatives,
including
•

•
•
•

•

implementation of a 2009 Framework Agreement on Integrated Cross-Border
Maritime Law Enforcement Operations (Shiprider program) that allows Royal
Canadian Mounted Police (RCMP) and U.S. Coast Guard personnel to jointly
crew marine vessels to enforce the law on both sides of the border;
a 2012 Visa and Immigration Information Sharing Agreement that allows for the
automated sharing of biographic and biometric information;
a 2013 entry/exit program that allows data on entry to one country to serve as a
record of exit from the other;
a 2015 Agreement on Land, Rail, Marine, and Air Transport Preclearance that
allows customs and immigration officials to clear travelers and cargo in their
countries of origin; and
a 2016 accord that allows for the exchange of information on individuals who
present a clear threat, including the countries’ respective “no-fly” lists.112

Canadian concerns about privacy and sovereignty delayed implementation of some of these
initiatives.113 Consequently, the United States and Canada did not begin exchanging information
on all U.S. and Canadian citizens under the entry/exit program until July 2019 and the Agreement
on Land, Rail, Marine, and Air Transport Preclearance did not enter into force until August 2019.
The COVID-19 pandemic led the U.S. and Canadian governments to close their shared land
border to all nonessential travel in March 2020.114 Although both governments generally sought
to maintain bilateral trade flows, the border restrictions took an economic and social toll on both
countries, particularly in border communities.115 Canada ultimately allowed vaccinated U.S.
citizens to begin nonessential travel to Canada again in August 2021, and the United States
reopened the land border to vaccinated Canadians for nonessential travel in November 2021.116
110 S.Rept. 118-81, p. 10.
111 The Beyond the Border declaration and action plan are available at https://www.dhs.gov/sites/default/files/

publications/us-canada-btb-action-plan.pdf.
112 U.S. Department of Homeland Security (DHS), “Beyond the Border Fact Sheet,” January 2017.
113 Evan Dyer, “Ottawa Gets an Earful on Proposed Expansion of U.S. Border Pre-clearance Powers,” CBC News,
August 6, 2017; and John Paul Tasker, “Ottawa’s Push to Share More Border-Crossing Data with U.S. Raising Red
Flags over Privacy,” CBC News, June 28, 2018.
114 DHS, “Joint Statement on U.S.-Canada Joint Initiative: Temporary Restriction of Travelers Crossing the US-Canada
Land Border for Non-Essential Purposes,” March 20, 2020.
115 Western Washington University, Border Policy Research Institute, Border Barometer, April 9, 2021.
116 Canadian Border Services Agency, “Travel Advisory: Reminder—On August 9th, Fully Vaccinated United States
(continued...)

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Canadians could fly into the United States throughout the pandemic. Canada and the United
States ended their vaccination requirements for all foreign travelers in October 2022 and May
2023, respectively.117
Some Members of Congress have raised concerns about an increase in unauthorized migrant
crossings and other security challenges since border travel restrictions have been lifted.118 The
number of individuals encountered by U.S. Border Patrol after crossing into the United States
from Canada between ports of entry rose from 2,238 in FY2022 to 10,021 in FY2023 and 23,721
in FY2024 (see Figure 1). This increase in the south-bound flow of unauthorized border-crossers
reportedly has been driven by nationals of India, Mexico, and various other countries flying to
Canada and then seeking entry into the United States, sometimes with the assistance of
smugglers.119 Others are seeking to stay in Canada, contributing to record asylum claims.120 Over
the past year, the Canadian government has ended visa-free travel for Mexican nationals,
enhanced scrutiny of visa applications for other visitors to Canada, and sought to crack down on
fraud and abuse in temporary resident programs in an attempt to address U.S. concerns as well as
the growing backlog of asylum claims in Canada.121
The number of asylum seekers intercepted by the RCMP after crossing into Canada from the
United States between ports of entry has trended in the opposite direction. This northern flow of
asylum seekers surged in 2017, reportedly spurred, in part, by the Trump Administration’s
immigration policies, including a plan to end Temporary Protected Status (TPS) for Haitians.122
Crossings declined during the pandemic but spiked again to nearly 40,000 in 2022 after the U.S.
and Canadian governments lifted border travel restrictions. This post-pandemic surge was
purportedly driven by individuals who had initially sought asylum in the United States but
determined they may have better odds of obtaining asylum and other support in Canada.123 RCMP
interceptions have declined dramatically since early 2023, when the U.S. and Canadian
governments expanded a 2004 Safe Third-Country Agreement that allows either country to return
to the other asylum seekers who cross the U.S.-Canada land border (see Figure 1). Prior to the
expansion, the agreement did not apply between ports of entry.124

Citizens and Permanent Residents Will Be Able to Enter Canada,” press release, August 6, 2021; and DHS, “Starting
Today Fully Vaccinated Travelers Permitted to Enter U.S. via Land and Ferry Border Crossings,” press release,
November 8, 2021.
117 Government of Canada, Public Health Agency of Canada, “COVID-19 Border Measures,” September 26, 2022; and
White House, “The Biden-Harris Administration Will End COVID-19 Vaccination Requirements for Federal
Employees, Contractors, International Travelers, Head Start Educators, and CMS-Certified Facilities,” May 1, 2023.
118 U.S. Congress, House Committee on Homeland Security, Subcommittee on Oversight, Investigations, and
Accountability, Biden’s Growing Border Crisis: Death, Drugs, and Disorder on the Northern Border, 118th Cong., 1st
sess., March 28, 2023.
119 See, for example, Elizabeth Thompson, “U.S. Border Patrol Reports Record Number of Encounters with Migrants at
the Canadian Border,” CBC News, September 12, 2024.
120 Anna Mehler Paperny, “Canada Hints at Fast-Tracking Refugee Refusals,” Reuters, November 26, 2024.
121 Ibid.; Reuters, “Exclusive—Canada Turning Away More Foreigners, Approving Fewer Visas in Border
Crackdown,” September 3, 2024; and CRS meeting with Canadian government officials, September 24, 2024.
122 See, for example, Dan Levin, “A Surge of Migrants Crossing into Quebec Tests Canada’s Welcome,” New York
Times, August 10, 2017. For more on TPS, see CRS Report RS20844, Temporary Protected Status and Deferred
Enforced Departure, by Jill H. Wilson.
123 See, for example, Reuters, “Insight—Canada Immigration: Why Record Asylum Seekers Are Crossing U.S.
Border,” March 11, 2023.
124 DHS, “United States and Canada Announce Efforts to Expand Lawful Migration Processes and Reduce Irregular
Migration,” press release, March 24, 2023.

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Figure 1. Encounters and Interceptions at the U.S.-Canada Border Between
Points of Entry: 2016-2024

Sources: U.S. Customs and Border Protection, “Nationwide Encounters” database, November 19, 2024; U.S.
Department of Homeland Security, Office of Homeland Security Statistics, 2022 Yearbook of Immigration Statistics,
p. 94; Government of Canada, Immigration, Refugees and Citizenship Canada, “Asylum Claimants Processed by
Year,” 2017-2024, https://www.canada.ca/en/immigration-refugees-citizenship/services/refugees/asylumclaims.html; and Canadian government data in Stephanie Levitz, “Asylum Seekers Arrested at Illegal Crossings so
Far in 2017 Nearly Half of 2016 Total,” Canadian Press, March 21, 2017.
Notes: U.S. Border Patrol data are reported by U.S. fiscal year while Royal Canadian Mounted Police (RCMP)
data are reported by calendar year. Border Patrol data for FY2020-FY2023 include public health expulsions
under Title 42 of the U.S. Code in addition to apprehensions under Title 8 of the U.S. Code; data for all other
years consist entirely of apprehensions. RCMP data for 2024 cover the first 11 months of the calendar year.

Some Members of Congress also have expressed concerns about an increase in encounters at the
U.S.-Canada border with individuals whose names appear in the Terrorist Screening Dataset—a
U.S. government database of known and suspected terrorists, affiliates, and others deemed to
represent a potential threat to the United States.125 Between FY2022 and FY2024, U.S. Customs
and Border Protection (CBP) averaged 387 encounters with watch-listed individuals at the U.S.Canada border per year, a 72% increase compared to 225 per year on average between FY2017
and FY2019 (prior to the pandemic); these figures may include repeat encounters with some
individuals. All but six (99.5%) of the encounters with watch-listed individuals between FY2022
and FY2024 occurred at U.S. ports of entry, where U.S. authorities may deny such individuals
entry into the United States. The remaining cases occurred between ports of entry; CBP recorded
three encounters with watch-listed individuals at the U.S.-Canada border between ports of entry
between FY2017 and FY2019.126
Canadian authorities assess that organized crime groups in Canada have become producers and
exporters of illicit fentanyl.127 According to a March 2024 U.S. Department of State report, “U.S.
125 See, for example, H.Res. 774. For more information on the Terrorist Screening Dataset, see CRS In Focus IF12669,

The Terrorist Watchlist, by Lisa N. Sacco.
126 U.S. Customs and Border Protection (CBP), “CBP Enforcement Statistics,” December 3, 2024,
https://www.cbp.gov/newsroom/stats/cbp-enforcement-statistics.
127 Government of Canada, Criminal Intelligence Service Canada, 2023 Public Report on Organized Crime, December
15, 2023.

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law enforcement has stated there is no evidence that Canada is trafficking vast amounts of
fentanyl to the United States.”128 In FY2024, CBP seized 43 pounds of fentanyl at the U.S.Canada border, representing 0.2% of CBP’s total fentanyl seizures for the fiscal year.129
Over the past four years, U.S. and Canadian officials have sought to enhance collaboration on
shared security challenges through the high-level Cross-Border Crime Forum, a Cross-Border
Firearms Task Force, and the Trilateral Fentanyl Commission (in which Mexico also participates).
Memoranda of understanding signed by the U.S. Drug Enforcement Administration and the
RCMP in November 2022 and by the Bureau of Alcohol, Tobacco, Firearms and Explosives and
the Canada Border Services Agency in March 2023 reportedly have allowed for increased
information sharing in support of cross-border investigations into opioid and gun trafficking.130 In
December 2024, the Liberal Party government proposed a C$1.3 billion ($956 million) border
plan intended to increase border surveillance and further enhance operational coordination and
information sharing with the U.S. government.131
A provision of the FY2025 NDAA (P.L. 118-159) directs the Department of Homeland Security
(DHS) to establish a Northern Border Mission Center. The center is to serve as DHS’s “forward
deployed centralized operations support center for domain awareness, information sharing,
intelligence, training, and stakeholder engagement with Federal, State, tribal, local, and
international government partners along the northern border.”132 The joint explanatory statement
accompanying the act also directs the Assistant Secretary of Defense for Homeland Defense and
Hemispheric Affairs to submit a report to the congressional defense committees on the assistance
that DOD provides to CBP and DHS to secure the U.S. northern border.133

Trade and Investment Issues134
The United States and Canada have one of the largest bilateral commercial relationships in the
world, including a highly integrated automotive and energy market. As noted above, the countries
have maintained free trade for more than three decades, first bilaterally under the 1989 U.S.Canada Free Trade Agreement, then trilaterally with Mexico under the 1994 NAFTA and its
successor, the 2020 USMCA.135 Congress approved implementing legislation for USMCA in
December 2019 (P.L. 116-113) and has a role in overseeing USMCA implementation.
In 2023, Canada was the United States’ top partner for combined trade in goods and services—the
United States imported $481.6 billion from Canada and exported $440.9 billion to Canada for a
total of $922.5 billion in bilateral trade.136 In 2023, Canada exported 77% of its goods to the
United States and was the third-largest supplier of goods to the United States, behind Mexico and
128 U.S. Department of State, International Narcotics Control Strategy Report, Volume I: Drug and Chemical Control,

March 2024, p. 88.
129 CBP, “Drug Seizure Statistics,” November 19, 2024, https://www.cbp.gov/newsroom/stats/drug-seizure-statistics.
130 DHS, “The 2023 Canada-U.S. Cross-Border Crime Forum,” April 28, 2023; and Dylan Robertson, “Canada, U.S. to
Share More Data in Fight Against Cross-Border Gun Smuggling, Opioids,” Canadian Press, April 28, 2023.
131 Government of Canada, Public Safety Canada, “Government of Canada Announces Its Plan to Strengthen Border
Security and Our Immigration System,” press release, December 17, 2024.
132 P.L. 118-159, §5611.
133 Joint Explanatory Statement to Accompany the Servicemember Quality of Life Improvement and National Defense
Authorization Act for Fiscal Year 2025, pp. 422-423.
134 Written by Kyla H. Kitamura, CRS Analyst in International Trade and Finance.
135 For more details on USMCA, see CRS Report R44981, The United States-Mexico-Canada Agreement (USMCA).
136 U.S. Bureau of Economic Analysis (BEA), “Table 1.5. U.S. International Trade in Goods and Services by Area and
Country,” December 18, 2024.

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China.137 Canada imported nearly half of its goods from the United States in 2023 and was the
United States’ top goods export destination—about 18% of U.S. goods exports went to Canada.138
Bilateral investment ties are also substantial. As of 2023, Canada was the third-largest source of
foreign direct investment (FDI) in the United States by stock ($671.7 billion), and nearly half of
Canada’s total FDI was in the United States.139 In 2023, the United States was the largest source
of FDI in Canada, comprising 45.7% of total FDI (C$618.2 billion; about $455 billion).140
As previously noted, President-elect Trump has stated that he may impose a 25% tariff on all
Canadian imports upon entering office on January 20, 2025.141 Given Canada’s deep economic
integration with the United States, some Canadian observers note that actual or potential
disruptions to U.S.-Canada trade would have large negative impacts on the Canadian economy.142
Some analysts have argued that broad U.S. tariffs on Canadian imports would have negative
effects on both Canada and the United States, particularly if Canada were to retaliate.143 Some
Canadian observers have expressed concerns about Canada’s economic reliance on the United
States and negative impacts on Canada resulting from geopolitical tensions between larger
economic powers (e.g., the United States, China, and the EU); such observers have argued that
Canada should enhance cooperation with other “middle power” countries who rely on a rulesbased international trading system in order to enhance Canada’s geopolitical leverage and
position.144 Canada has 15 free trade agreements (FTAs) with 51 countries, encompassing about
60% of global GDP in 2023.145 These FTAs include USMCA, the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP), and an agreement with the EU
that is provisionally in force.146
One of the key issues facing the 119th Congress—with potentially large implications for U.S.Canada trade relations—is the scheduled 2026 “joint review” of USMCA. USMCA is scheduled
to terminate 16 years after its entry into force (July 1, 2036), unless all three USMCA parties
confirm that they wish to continue the agreement through a “joint review” process. The first joint
137 Data from the U.S. Census Bureau and Government of Canada, Statistics Canada, as presented by Trade Data

Monitor, accessed December 2024.
138 Data from the U.S. Census Bureau, accessed December 2024, and Government of Canada, Statistics Canada, as
presented by Trade Data Monitor, accessed December 2024.
139 Data from BEA, “Table 7. Foreign Direct Investment in the United States: Selected Items by Country of Foreign
Parent, 2020–2023,” July 23, 2024; and Government of Canada, Statistics Canada, “Foreign direct investment, 2023,”
April 29, 2024. For BEA data, FDI position on a historical-cost basis by country of foreign parent.
140 Ibid. and Government of Canada, Statistics Canada, “Foreign Direct Investment in Canada by Select Ultimate and
Immediate Investing Country, 2023,” modified April 29, 2024. FDI by stock by immediate investing country.
141 Jill Colvin and Rob Giles, “Trump Threatens to Impose Sweeping New Tariffs on Mexico, Canada and China on
First Day in Office,” Associated Press, November 26, 2024.
142 Based on various CRS conversations with Canadian stakeholders in September and October 2024. Also see, for
example, Edward Greenspon, Janice Gross Stein, and Drew Fagan, “Canada Needs to Have a Plan for the U.S., No
Matter Who Becomes President. That Starts with Making Us Matter More,” Globe and Mail, April 27, 2024.
143 Stephen Tapp and Trevor Tombe, What the Return of the “Tariff Man” Means for the Canadian and U.S.
Economies, Canadian Chamber of Commerce’s Business Data Lab, November 28, 2024; and Kate Gibson, “Trump
tariffs on Canada Imports Could Lead to Sharply Higher Gas Prices, Experts Warn,” CBS News, November 27, 2024.
144 See, for example, Patrick Leblond, “Canada Needs to Find New Ideas in Geopolitical and Economic Strategy to
Avoid Getting Squeezed,” Policy Options, Institute for Research on Public Policy, September 10, 2024.
145 Government of Canada, “Trade and Investment Agreements,” updated October 31, 2024; and CRS analysis of data
from the International Monetary Fund, World Economic Outlook Database, October 2024.
146 The United States does not currently have an FTA with the EU and withdrew from CPTPP’s predecessor, the TransPacific Partnership (TPP) in 2017 after negotiations were completed. For more on CPTPP, see CRS In Focus IF12078,
CPTPP: Overview and Issues for Congress.

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review is scheduled to be held on the coming sixth anniversary of the agreement’s entry into
force, July 1, 2026.147 This is the first time such a joint review provision has been included in any
U.S. free trade agreement. Due to the lack of precedent, some observers have noted that there is
uncertainty about the scope and process related to the review.148 The Canadian government held
public consultations on USMCA from August 2024 to October 2024.149 The Office of the United
States Trade Representative (USTR) is also statutorily required to seek public comments, hold a
public hearing, and report to Congress ahead of the joint review.150
Congress has an oversight role in the joint review process and could potentially shape U.S.
priorities and approaches through hearings, letters, and other consultation mechanisms. Some
Members have lauded the U.S.-Canada economic partnership and highlighted the potential for
bilateral cooperation to develop more resilient supply chains (e.g., S.Res. 591/H.Res. 1053). At
the same time, some Members have expressed concerns about various trade issues with Canada.
Outlined below are a few key U.S.-Canada trade issues, including “Automotive Trade,” “Digital
Services,” “Canadian Dairy Tariff-Rate Quotas and Supply Management System,” “Softwood
Lumber,” and “Government Procurement and Federally Funded Infrastructure.” Congress may
consider the implications of these issues in relation to the USMCA joint review or in the context
of the broader U.S.-Canada relationship.

Automotive Trade
NAFTA was instrumental in shaping a highly integrated North American automotive industry. It
built upon automotive trade integration that had already been developed between the United
States and Canada, dating back to the Canada-United States Automotive Products Agreement
(Auto Pact), signed in 1965 and approved by P.L. 89-283, commonly known as the Automotive
Products Trade Act.
In 2023, the United States imported $63 billion in automotive goods from Canada and exported
$68.2 billion to Canada.151 In 2023, the United States supplied 41% of Canadian vehicle imports
by value, and Canada supplied 17% of U.S. vehicle imports by value.152 The Canadian auto
industry, which includes subsidiaries of U.S.-headquartered automakers, is highly reliant on the
U.S. auto market—in 2023, 94% of Canadian auto exports by value went to the United States.153
For this reason, some Canadian auto industry groups prioritize maintaining integration with the
U.S. economy and alignment with U.S. policies and regulations.154
Several key issues related to the North American auto industry such as USMCA automotive rules
of origin and automotive imports and investments from China are discussed below. The 119th
Congress has an oversight role over the implementation of USMCA and may monitor
147 Agreement between the United States of America, the United Mexican States, and Canada (USMCA), Article 34.7.
148 See, for example, Simon Lester, A New Chapter in Trade: Preparing for the Landmark Review of the USMCA, Rice

University’s Baker Institute for Public Policy, June 14, 2024.
149 Government of Canada, Global Affairs Canada, “Public consultations on Canada-United States-Mexico Agreement
commence,” August 21, 2024.
150 See CRS In Focus IF10997, U.S.-Mexico-Canada (USMCA) Trade Agreement.
151 BEA, “Table 1.5. U.S. International Trade in Goods and Services by Area and Country,” December 18, 2024.
152 Harmonized System (HS) code 8703. CRS analysis of data from the U.S. Census Bureau, and data from
Government of Canada, Statistics Canada, as presented by Trade Data Monitor, accessed December 2024.
153 HS code 8703. CRS analysis of data from Government of Canada, Statistics Canada, as presented by Trade Data
Monitor, accessed December 2024.
154 Canadian Vehicle Manufacturers’ Association, “CVMA Statement on Securing the Automotive Supply Chain,”
press release, September 25, 2023.

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developments related to these issues—including through the USMCA joint review—and assess
their implications for the U.S. and North American automotive industry as well as broader U.S.Canada relations.

Rules of Origin
NAFTA established rules for duty-free automotive trade in North America (referred to as rules of
origin), and USMCA tightened these rules.155 The automotive rules of origin were an area of
contention among and within the United States, Canada, and Mexico during USMCA
negotiations. During the implementation phase, the three parties have disagreed over the
interpretation of the rules. Mexico and Canada challenged the U.S. interpretation of North
American content requirements related to the automotive rules of origin under USMCA’s Chapter
31 state-state dispute settlement mechanism. The United States argued for a stricter approach to
calculating North American content, particularly related to core parts (e.g., engines,
transmissions). Mexico and Canada argued for a more flexible interpretation that would help
North American producers meet the USMCA content requirements.156 On December 14, 2022, a
USMCA panel issued a report ruling in favor of Mexico and Canada’s position.157 The decision
cannot be appealed. As of December 2024, the three parties have not reached a resolution. Under
USMCA rules, Canada and Mexico could have begun suspending certain benefits to the United
States on January 28, 2023, 45 days after the parties received the final report, but they have not
done so to date.
The December 2022 USMCA panel decision has provoked mixed reactions from North American
stakeholders. Canadian officials and Mexican business groups praised the decision, whereas
USTR expressed disappointment, claiming the panel’s interpretation could negatively impact the
North American auto industry and U.S. jobs.158 Some U.S. stakeholders, such as labor groups,
expressed concerns that the USMCA panel ruling undermines efforts to boost the U.S. auto
industry and undercuts workers’ confidence in trade agreements.159 At the same time, some
automotive industry groups have criticized the Biden Administration for not complying with the
panel’s decision in favor of Canada and Mexico’s interpretation of the rules of origin, with one
group stating that this lack of resolution creates uncertainty as the automotive industry deals with
a “regulatory limbo.”160
Some automotive industry groups have noted that the USMCA rules of origin create additional
administrative burdens, and have called for more flexibility.161 At the same time, some labor
groups have called for tighter rules of origin on components related to EVs and autonomous

155 For more details, see CRS In Focus IF12082, USMCA: Automotive Rules of Origin.
156 Steven Chase, “USMCA Auto-Dispute Ruling Favours Canada, Mexico; Panel’s Decision Upholds Regional

Content Rules Negotiated in Pact That Succeeded NAFTA,” Globe and Mail, January 11, 2023.
157 The USMCA panel report is available at https://ustr.gov/sites/default/files/enforcement/FTA/USMCA%2031/
USMCAAutomotive%20ROO.pdf.
158 Government of Canada, Global Affairs Canada, “Statement by Minister Ng on Canada-United States-Mexico
Agreement Dispute on Rules of Origin for Automotive Goods,” January 11, 2023; and Alejandro Alegría, “Fallo sobre
Reglas de Origen Favorece Institucionalidad del T-MEC: IP,” La Jornada, January 11, 2023.
159 United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), “UAW Statement on the
Car-Content Rule Announced by the USTR,” press release, January 12, 2023.
160 Autos Drive America, Inaction on USMCA Creates Uncertainty for North American Auto Industry, January 31,
2024.
161 USTR, Report to Congress on the Operation of the United States-Mexico-Canada Agreement with Respect to Trade
in Automotive Goods, July 1, 2024, pp. 13-14.

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vehicles.162 Such labor groups have also called for increasing the 2.5% U.S. most-favored-nation
(MFN) tariff on passenger vehicles—which the United States applies to vehicles from non-FTA
countries—to encourage greater compliance with the USMCA rules of origin.163 Some observers
have noted, for example, that North American auto manufacturers may consider paying the 2.5%
tariff less costly than the investment required to bring their supply chains into compliance with
USMCA rules of origin.164

PRC Automotive Imports and Investments
As of September 27, 2024, China’s EV exports to the United States face an additional 100% tariff
under Title III of the Trade Act of 1974 (19 U.S.C. §§2411-2420), commonly referred to as
“Section 301.”165 The United States also implemented 25% tariffs on EV batteries and critical
minerals, with some tariffs going into effect in September 2024 and others scheduled to go into
effect in 2026.166 The Biden Administration cited “extensive subsidies and non-market practices
leading to substantial risks of overcapacity” from China and stated that it was implementing
tariffs to “protect American manufacturers from China’s unfair trade practices.”167
Some Members of Congress have noted an increase in China’s global vehicle exports and
expressed concerns that PRC firms may seek to circumvent the Section 301 tariffs on PRC
imports by establishing operations in North America.168 Some observers have noted that imports
to the United States from potential PRC operations in Canada or Mexico would be deemed
Canadian or Mexican goods and face MFN tariff rates, or be traded duty-free if they meet the
USMCA rules of origin).169 Some labor groups have argued for increasing U.S. MFN tariff rates
on vehicles and auto parts to raise the costs of Section 301 tariff circumvention and encourage
compliance with USMCA rules of origin; such groups have also commented that the USMCA
partners may need to consider how to address imports of PRC automakers’ vehicles exported
from third countries (not coming from China).170

162 UAW, “UAW’s Public Comment on Operation of the United States-Mexico-Canada Agreement with Respect to

Trade in Automotive Goods,” January 17, 2024, https://www.regulations.gov/comment/USTR-2023-0013-0013, and
Unifor, “A Better Deal for Canada: Fixing the Flaws in North American Trade, Submission to Government of Canada
Consultations on the Operation of the Canada-United States-Mexico Agreement (CUSMA),” October 31, 2024.
163 See definition of most-favored nation (MFN) tariff at https://www.wto.org/english/thewto_e/glossary_e/
mfn_tariff_e.htm.
164 See, for example, William Alan Reinsch, USMCA Automotive Rules of Origin: Economic impacts, Competitiveness
Effects, and Relevance, Center for Strategic & International Studies, November 4, 2022. The MFN tariff for certain
pickup trucks is 25%.
165 For more on the Section 301 China tariffs, see USTR, “China Section 301-Tariff Actions and Exclusion Process,”
https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions. The Section 301 tariff on EVs is in
addition to the 2.5% MFN tariff. USTR, “Notice of Modification: China’s Acts, Policies and Practices Related to
Technology Transfer, Intellectual Property and Innovation,” 89 Federal Register 76581, September 18, 2024.
166 Ibid.
167 White House, “FACT SHEET: President Biden Takes Action to Protect American Workers and Businesses from
China’s Unfair Trade Practices,” May 14, 2024.
168 See, for example, Sen. Marco Rubio, “Rubio Introduces Bills to Prevent China from Flooding U.S. Auto Markets,”
press release, March 5, 2024; and Letter from Rep. Mike Gallagher and Rep. Raja Krishnamoorthi et al. to USTR
Katherine Tai, November 7, 2023.
169 USTR, Report to Congress on the Operation of the United States-Mexico-Canada Agreement with Respect to Trade
in Automotive Goods, July 1, 2024, pp. 25-26, and Alliance for American Manufacturing, On a Collision Course:
China’s Existential Threat to America’s Auto Industry and Its Route Through Mexico, February 20, 2024.
170 USTR, Report to Congress on the Operation of the United States-Mexico-Canada Agreement with Respect to Trade
in Automotive Goods, July 1, 2024, pp. 25-26.

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Canadian Members of Parliament and other Canadian stakeholders have expressed concerns
about being viewed as a “backdoor” for PRC imports and have urged alignment with U.S.
policies related to tariffs and bans of imported goods involving forced labor.171 In 2023, Canada
imported $2 billion worth of vehicles—mostly EVs—from China; this represented a 317%
increase from 2022 ($473 million) and a 1,775% increase from 2018 ($105 million).172
In August 2024, Canada announced its intention to impose tariffs on PRC EV imports. In
September 2024, in what some observers have described as retaliation for Canada’s actions,
China’s Ministry of Commerce announced that it would initiate an anti-dumping investigation
into imports of Canadian canola seed.173 On October 1, 2024, Canada imposed an additional
100% tariff on EV imports from China (on top of Canada’s 6.1% MFN tariff on passenger
vehicles) under Section 53 of its Customs Tariff.174 From September 10 to October 10, 2024, the
Canadian government also held a separate consultation on potential tariffs in “critical
manufacturing sector” items, such as EV batteries, semiconductor-related goods, solar products,
and critical minerals.175 As of October 1, 2024, federal incentives Canada extended for zeroemission vehicles were limited to vehicles manufactured in a country with which it has an FTA.176
Some stakeholders, including Biden Administration officials, promote deliberating a coordinated
North American approach to PRC imports and investments through the USMCA joint review.177

Critical Minerals and EV Battery Supply Chains
Critical minerals are used in goods related to defense, clean energy (e.g., EVs), and other strategic
sectors. Some analysts have expressed concerns about a high risk for potential disruptions to
critical mineral supply chains because current critical mineral mining and processing is
concentrated in a small number of countries, notably China.178 Such analysts have commented
that this challenge could become more acute as demand for critical minerals grows due to the
global transition toward clean technologies.
Canada has reserves and production of various critical minerals and materials—including cobalt,
copper, graphite, lithium, and nickel.179 According to Canada’s critical minerals strategy
document, the country is seeking to increase production of critical minerals and to develop
commercial production of reserves, such as rare earth elements.180 The strategy also discusses
Canada’s goals to develop other supply chain capabilities, such as processing and recycling of

171 See, for example, Parliament of Canada, House of Commons of Canada, Standing Committee on International

Trade, 2026 CUSMA Review, hearing, 44th Parl., 1st sess., May 30, 2024.
172 HS code 8703. CRS analysis of data from Government of Canada, Statistics Canada, as presented by Trade Data
Monitor, accessed December 2024.
173 Canola Council of Canada, “Trade with China,” https://www.canolacouncil.org/china-update/. According to the
Canola Council of Canada, China is the second-largest export market for Canadian canola.
174 “China Surtax Order (2024): SOR/2024-187,” Canada Gazette, Part II, vol. 158, no. 21, SOR/2024-187, September
20, 2024.
175 Government of Canada, Department of Finance Canada, “Consultations on Potential Surtaxes in Response to Unfair
Chinese Trade Practices in Critical Manufacturing Sectors,” updated September 10, 2024.
176 Government of Canada, Transport Canada, “Incentives for Zero-Emission Vehicles (iZEV),” updated July 5, 2024.
177 Tracy Alloway and Joe Weisenthal, “US Trade Representative Tai Explains the New Way of Trading with China,”
Bloomberg, September 9, 2024; and Margaret Spiegelman, “Tai: Some ‘Discomfort’ Will Be Key to Successful
USMCA Review,” Inside U.S. Trade, March 6, 2024.
178 International Energy Agency, Global Critical Minerals Outlook 2024, May 2024.
179 U.S. Geological Survey, “Mineral Commodity Summaries 2024,” https://doi.org/10.3133/mcs2024.
180 Government of Canada, “The Canadian Critical Minerals Strategy,” December 2022.

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critical minerals. Individual provinces have also released critical minerals strategies.181 The
Canadian government notes some challenges to further mining development, such as complex
regulatory and permitting processes, and insufficient investments in land-based, transportation,
and energy infrastructure needed to access reserves in remote areas.182
In October 2022, Canada updated its guidelines related to foreign investments from state-owned
enterprises in critical minerals sectors; Canadian officials stated that “significant transactions by
foreign state-owned enterprises in Canada’s critical minerals sectors will only be approved as of
likely net benefit on an exceptional basis.”183 This action occurred amidst broader concerns about
PRC investments in strategic sectors. For example, Congress passed P.L. 117-169, which included
revisions to the $7,500 U.S. EV tax credit (discussed below), such as prohibiting EV battery
components and critical minerals from “foreign entities of concern,” (e.g., PRC state-owned
enterprises). In November 2022, the Canadian government ordered the divestiture of several
investments in Canadian critical mineral companies by PRC and Hong Kong investors.184 Some
observers have noted that some Canadian mining companies are struggling to attract non-PRC
capital and may be moving overseas to avoid Canadian investment regulations.185
Some U.S. observers have called for increased cooperation between the United States and allies
such as Canada on mining regulations and investments.186 The United States and Canada are
engaged in cooperative efforts related to critical minerals through several bilateral and
multilateral fora. Canada is a member of the U.S.-initiated Minerals Security Partnership, which
brings various countries and private sector stakeholders together to discuss critical minerals
project investments and standards.187 Under the Trump Administration, Canada and the United
States also launched a bilateral Joint Action Plan on Critical Minerals Collaboration to increase
information and data sharing, promote private sector engagement, coordinate on research and
development, and collaborate in multilateral fora.188
Congress has taken some actions to deepen U.S.-Canadian cooperation on critical minerals.
During the 117th Congress, for example, Congress enacted legislation (P.L. 117-169, commonly
referred to as the Inflation Reduction Act (IRA)), which addressed Canadian concerns about
proposed U.S. content and assembly requirements for EV tax credits.189 The law included North
American assembly requirements for vehicles and batteries, rather than U.S.-specific
181 See, for example, the Government of Quebec, “Québec Plan for the Development of Critical and Strategic

Minerals,” https://www.quebec.ca/en/government/policies-orientations/quebec-plan-development-critical-strategicminerals, updated June 3, 2024.
182 Government of Canada, “The Canadian Critical Minerals Strategy,” December 2022.
183 Government of Canada, “Policy Regarding Foreign Investments from State-Owned Enterprises in Critical Minerals
under the Investment Canada Act,” updated June 26, 2024; and Innovation, Science and Economic Development
Canada, “Canada Strengthens Guidelines to Protect Critical Minerals Sectors from Foreign State-Owned Enterprises,”
October 28, 2022.
184 Government of Canada, Innovation, Science and Economic Development Canada, “Government of Canada Orders
the Divestiture of Investments by Foreign Companies in Canadian Critical Minerals Companies,” November 2, 2022.
185 See, for example, Niall McGee, “Navigating ‘The Valley of Death’: Why Canada’s Emerging Critical Minerals
Miners Are Struggling to Survive and What Can Be Done About It,” Globe and Mail, November 22, 2024.
186 Joseph Bouchard, “Canadian Miners Need Capital – but Only China Is Stepping Up,” The Diplomat, March 25,
2024.
187 U.S. Department of State, “Minerals Security Partnership,” June 14, 2022.
188 White House, U.S.-Canada/Canada-U.S. Supply Chains Progress Report, June 2022; and Government of Canada,
Natural Resources Canada, “Canada and U.S. Finalize Joint Action Plan on Critical Minerals Collaboration,” press
release, January 9, 2020.
189 Alexander Panetta, “Trudeau Arrives in U.S. with Last-Minute Warning for Democrats About Electric Vehicle Tax
Credit,” CBC News, November 17, 2021.

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requirements, which Canadian officials publicly asserted would have had negative economic
impacts on Canada and the integrated North American auto sector.190 The EV tax credit (26
U.S.C. §30D) also requires that a certain percentage of critical minerals in an EV battery be
sourced from the United States (or in an FTA partner country, such as Canada) or recycled in
North America.191 U.S. policymakers crafted such IRA provisions in part reflecting concerns over
U.S. dependence on PRC supply chains.192
The Canadian federal government and provincial governments have been actively supporting EV
supply chain investments. According to analysis by the Office of the Parliamentary Budget
Officer, from October 8, 2020 to April 25, 2024, a total of C$46.1 billion ($33.9 billion) in
investments across the EV supply chain were announced, with up to C$52.5 billion
($38.6 billion) in estimated federal and provincial government support.193
The U.S. and Canadian governments have also co-invested in some critical minerals projects. In
May 2024, for example, the U.S. Department of Defense announced $14.7 million in funding
under Title III of the Defense Production Act (50 U.S.C. §§4501 et seq.) to two Canadian
companies operating in Canada to “build resilience” in cobalt and graphite supply chains.194 The
Canadian government awarded the companies $9.2 million in additional funding.195 The U.S. and
Canadian governments have also announced co-investments related to the production of cobalt
sulfate and active materials for lithium iron phosphate cathodes as well as tungsten mining.196
Some observers have commented that the USMCA joint review may be an opportunity to further
discussions about North American collaboration on critical minerals and clean energy supply
chains.197 As noted above, Congress has an oversight role in the joint review process and may
consider whether to prioritize critical minerals supply chain collaboration as part of the review.

Digital Services
The United States is home to several of the world’s largest digital services providers. The
Canadian government has passed several bills that tax, mandate payments from, and/or regulate
such digital services companies. As described below, some Members of Congress and business
groups have argued that these laws disadvantage and/or target U.S. companies and could

190 See, for example, statements by Mary Ng, then-Canadian Minister of International Trade, Export Promotion, Small

Business and Economic Development, as quoted in Steven Chase, “Threat to Canadian Electric Vehicle Industry
Dissipates with U.S. Senate Deal,” Globe and Mail, July 28, 2022.
191 For more information, see CRS In Focus IF12517, U.S.-Japan Critical Minerals Agreement; and CRS In Focus
IF12600, Clean Vehicle Tax Credits.
192 See, for example, Senate Majority Leader Chuck Schumer, “Summary of the Energy Security and Climate Change
Investments in the Inflation Reduction Act of 2022,” July 27

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR47620. Public record. Not legal advice.