Americans and Canadians fought side by side in both World Wars, Korea, and Afghanistan, and continue to collaborate on international political and security matters, such as the campaign against the Islamic State. The countries also share mutual security commitments under the North Atlantic Treaty Organization (NATO), cooperate on continental defense through the binational North American Aerospace Defense Command (NORAD), maintain a close intelligence partnership through the "Five Eyes" group of nations, and coordinate frequently on law enforcement efforts, with a particular focus on securing their shared 5,500-mile border. Canada is the second-largest trading partner of the United States, with total two-way cross-border goods and services trade amounting to over $1.6 billion per day in 2017. Nevertheless, bilateral relations have been strained from time to time by individual matters, such as Canada's decision not to participate in the Iraq war in 2003 and the Obama Administration's rejection of the Keystone XL pipeline in 2015. Canadian officials have been particularly frustrated by the Trump Administration's approach to renegotiating NAFTA and other trade disputes, such as the Administration's decision to impose tariffs on Canadian steel and aluminum. Trudeau and the Liberals also campaigned on a series of political reforms. Foreign and Security Policy

Canada views a rules-based international order as essential for its physical security and economic prosperity. In June 2017, Canadian Foreign Minister Chrystia Freeland asserted that Canada must set its "own clear and sovereign course" to renew and strengthen the international order given that the United States appeared to be withdrawing from its global leadership role. Monetary Policy

Since the global financial crisis, United States and Canada have maintained an accommodative monetary policy. Over the past 30 years, U.S.-Canada trade relations have been governed first by the 1989 U.S.-Canada Free Trade Agreement and, subsequently, by the 1994 North American Free Trade Agreement. Whether it has been the reemergence of old irritants such as trade in softwood lumber and dairy restrictions, new disputes such as commercial aviation, or the contentious NAFTA negotiations, the commercial relationship between the two nations is facing new challenges. The dispute revolves around different pricing policies and forest management structures in Canada and the United States. Environmental protection authorities are shared by the federal and subfederal levels in both countries. Prime Minister Trudeau called President Trump's decision "disheartening," stating that "Canada stands united with all the other parties," and pledged that "Canada will continue to work with the United States at the state level, and with other U.S. stakeholders, to address climate change and promote clean growth." Federal, state, provincial, local, and tribal governments in the United States and Canada have sought to work together to address those environmental challenges and restore the Great Lakes ecosystem.
Relations between the United States and Canada traditionally have been close, bound together by a common 5,500-mile border—"the longest undefended border in the world"—as well as by shared history and values. The countries have long-standing mutual security commitments under the North Atlantic Treaty Organization (NATO) and North American Aerospace Defense Command (NORAD), and continue to work together to address international security challenges, such as the Islamic State insurgency in Iraq and Syria. Canada and the United States also maintain close intelligence and law enforcement ties and have engaged in a variety of initiatives to strengthen border security and cybersecurity in recent years.
Although Canada's foreign and defense policies are usually in harmony with those of the United States, disagreements arise from time to time. Canada's Liberal Party government, led by Prime Minister Justin Trudeau, has prioritized multilateral efforts to renew and strengthen the rules-based international order since coming to power in November 2015. It has expressed disappointment with President Donald Trump's decisions to withdraw from international accords, such as the Paris Agreement on climate change, and has questioned whether the United States is abandoning its global leadership role. Such concerns have been heightened by the discord witnessed at the G-7 summit held at Charlevoix, Quebec, in June 2018.
The United States and Canada maintain extensive commercial ties, with total two-way cross-border goods and services trade amounting to over $1.6 billion per day in 2017. Bilateral trade relations have grown increasingly strained, however, as old irritants, such as softwood lumber trade, have reemerged, and the countries' differing trade policy objectives have given rise to new disputes. Efforts to renegotiate the 1994 North America Free Trade Agreement (NAFTA) and the Trump Administration's imposition of tariffs on Canadian steel and aluminum have proven particularly contentious.
Many Members of Congress follow U.S.-Canada issues that affect their states and districts, such as Great Lakes restoration efforts and ongoing negotiations over the Columbia River Treaty. Since Canada and the United States are similar in many ways, lawmakers in both countries also study solutions proposed across the border on such issues as federal fiscal policy and federal-provincial power sharing. U.S. and Canadian domestic policies have diverged on a variety of matters over the past year and a half, including taxation and environmental protection.
This report presents an overview of Canada's political situation, foreign and security policy, and economic and trade policy, focusing particularly on issues that may be relevant to U.S. policymakers.