Bank of Canada Governor Stephen Poloz has been stressing exports as a critical area of growth for the Canadian economy in the coming years.

But Canada’s bilateral trade surplus with the US is a shadow of its former past. This is partly due to the slow speed of the US economic recovery, but it also reflects deterioration in Canadian business competitiveness. This is illustrated by the growing gap between US economic activity and Canadian merchandise export volumes.

And energy prices in Canada, complicated by a glut of oil and natural gas production in the US, continue to remain volatile and will hamper business investment this year.

Meanwhile, the US trade deficit is at a four-year low. The traditional “consumer of last resort” is not acting so, at least at this stage of the recovery from the Great Recession.

China’s balance of trade dynamic includes its own curiosities, at least when viewed through the prism of recent decades’ experience. Is the Middle Kingdom the next “consumer of last resort”?

And what would that mean for Canada?

Prime Minister Stephen Harper and his government have aggressively courted Asian counterparts, particularly in China and India, in recent years. Mr. Harper’s dealings with the Chinese were uneasy during the early years of his ministry after he criticized the Communist Party of China’s human rights record way back in 2006.

Eastern markets are now critical destinations for Canadian hydrocarbons, particularly as the US enjoys its own oil-and-gas boom driven by exploitation of long-known shale reserves via new technologies.

For the present, however, Canada’s merchandise trade deficit widened to CAD940 million in November 2013 versus a CAD908 million gap in October that was revised from a CAD75 million surplus.

Economists were expecting a CAD100 million deficit in November.

The US trade gap, meanwhile, narrowed 12.9 percent to CAD34.3 billion, smaller than projected by any economist surveyed by Bloomberg and the narrowest deficit since October 2009.

The US remains Canada’s biggest trade partner, and the two countries still from the biggest bilateral trade relationship in the world.

Other indicators suggest weakness in the Great White North. Canada’s Ivey Purchasing Manager Index, compiled by Western University, fell to 46.3 in December on a seasonally adjusted basis following a November reading of 53.7. Economists forecast an advance to 54.5.

Readings of more than 50 indicate purchasing by governments and companies advanced.

Mr. Poloz recently noted that exports have been disappointing through a period when the Canadian dollar weakened and the US economy accelerated. This represents a departure from historical norms, which demonstrate that as the US heals Canada too benefits.

Canadian policymakers are now talking down the loonie in an effort to make Canadian goods more attractive on a price basis in global markets. In his October 2013 policy statement Mr. Poloz dropped language that had been put in place by Mark Carney, now the head of the Bank of England, about the need for a future rate increase.

And Finance Minister Jim Flaherty last week noted that a weaker currency would help Canada’s manufacturers.

Although old patterns are not prevailing during this North American recovery, and Canada is not enjoying knock-on benefits of increased US economic activity, there are companies operating in specific areas that nevertheless should do well.

Below we identify three Canada-based industrial companies well-positioned to benefit from accelerating US economic growth and four energy-focused names whose fortunes will be impacted by an impending US executive branch decision on a key piece of North American infrastructure.

Industrials Might…

In 2012 CE Portfolio Conservative Holding TransForce Inc (TSX: TFI, OTC: TFIFF) generated about 28 percent of its total revenue in the US. That was actually down from 36 percent in 2011 and 30 percent in 2010.

Canadian industrial are well-positioned to lead the broader S&P/TSX Composite Index in 2014. Most economic forecasts put US growth ahead of Canadian gross domestic product (GDP) expansion by almost half a percentage point over the next 12 months.

The rollback of US Federal Reserve monetary stimulus should support a stronger US dollar, though the explosive gains of recent weeks could be tempered as the realization that the central bank plans to stick with its “zero bound” fed funds rate until the threat of disinflation, or deflation, recedes sets in.

Nevertheless, companies leveraged to accelerating US economic growth should see solid earnings growth this year.

TransForce’s stock performance is strongly correlated to the US Purchasing Managers Index for manufacturing as well as US industrial production. Russel Metals Inc (TSX: RUS, OTC: RUSMF), meanwhile, does well when US industrial production is on the rise.

TransForce, which serves a number of different segments in trucking including parcel, less-than-truckload, truckload and specialized services and has expanded its presence south of the border by consolidating financially weaker players in a highly fragmented industry, is poised to benefit from increased US export activity.

In Canada, TransForce’s next-day courier brands Canpar, Loomis and ATS compete with United Parcel Service Inc (NYSE: UPS) and FedEx Corp (NYSE: FDX). Management knows enough not to go up against those two heavyweights in the US.

But TransForce is one of the biggest “same-day guys” south of the border: It delivers all packages to customers for the likes of Staples Inc (NSDQ: SPLS). UPS and FedEx aren’t big same-day players in the US.

TransForce has also diversified into waste haulage, landfill and recycling in Ontario and Quebec, under the Lafleche, Matrec and Malex names. Waste is now about 6 percent of TransForce’s business.

Over the past two decades, the company has bought dozens of trucking companies, and its revenue has quadrupled over the past 10 years. The company has met or beaten earnings expectations in eight of the last nine quarters.

TransForce recently boosted its annual dividend to CAD0.58 per share, good for a yield of 2.4 percent at current levels. And it’s also executed a solid share buyback program.

Russel Metals traces its roots to a trading company founded by Scottish immigrant John Russel in Montreal in 1784. Today it distributes and processes metal products such as pipe for oil and gas drilling and I-beams for construction. The company has recovered nicely from a near-death experience during the Great Financial Crisis, as the price of hot-rolled steel coil, an industry benchmark, plummeted to USD400 per metric ton from USD1,200 within weeks.

From a pre-crisis high of CAD33.61 in early May 2007 Russel’s share price dove to CAD9.77 in early March 2009, around the time of the GFC low for global equities. From there, however, the bounceback–in the market as well as on the ground–has been remarkable.

Discipline was the key to the firm’s quick recovery. Russel limits its invested-capital spending even in good times. That being said, Russel has been an active acquirer, both before and since the GFC.

Russel, which derived approximately 33 percent of its 2012 annual revenue from US operations, almost halved its quarterly dividend rate to CAD0.25 a quarter in 2009 but has since raised it back to CAD0.35, giving it a hefty annual yield of 4.6 percent yield at current levels. Russel Metals is a buy under USD30.

One of North America’s leading solid waste management companies, Progressive Waste Solutions Inc (TSX: BIN, NYSE: BIN) in 2012 derived approximately 59 percent of its revenue from its US operations. Its business is leveraged on the upside to economic activity, as rising GDP generally begets more garbage to handle. Progressive Waste enjoys downside protection due to the fact that it operates under long-term contracts with high-quality customers.

As the economy accelerates in the US volumes will increase. The company has bid on a number of major contracts, and earnings are set to rise steadily. Progressive Waste has also raised its dividend twice in the past 24 months, and another increase in 2014 is likely.

Progressive Waste Solutions, which is currently yielding 2.3 percent, is a buy under USD26.

The Other Elephant

A touchstone US-Canada issue at this early juncture in 2014, along with the relationship between the respective currencies perhaps the most newsworthy of relevant topics, is the status of TransCanada Corp’s (TSX: TRP, NYSE: TRP) Keystone XL project.

The Obama administration rejected TransCanada’s initial application to build the extension to the existing Keystone system after officials in Nebraska said the new pipeline would imperil ecologically sensitive lands, including the Ogallala Aquifer.

TransCanada then split the project in two. Oil began flowing through the southern leg of the project–which runs from Cushing, Oklahoma, to the Gulf Coast–on Dec. 9, 2013, and will begin making crude deliveries this month.

The company’s revised application for the rerouted northern leg, filed in May 2012, still awaits a decision by the US government. Because the northern leg crosses an international border, a special permit granted by the US Dept of State is required.

A draft State Dept report released in early 2013 concluded that Keystone XL wouldn’t cause increased greenhouse gas emissions (GHG) because projects in Canada’s oil sands, the world’s third-largest crude reserves, would be developed anyway and transported to market by rail.

President Obama has said the project wouldn’t be in the US’ best interests if it contributes to climate change. The final State Dept environmental impact assessment is expected any day now.

This assessment is the last analysis before a 90-day period during which the department reviews whether Keystone XL is in the US interest.

TransCanada management has estimated that the earliest Keystone XL could come online, assuming a mid-2014 approval, is 2016.

The northern leg of this pipeline is now more critical to Canadian oil sands producers, including Canadian Natural Resources Ltd (TSX: CNQ, NYSE: CNQ), Suncor Energy Inc (TSX: SU, NYSE: SU) and Cenovus Energy Inc (TSX: CVE, NYSE: CVE), than it is to the company that would own and operate it, should the US government finally grant final approval for its construction.

TransCanada has about CAD33 billion of projects apart from the CAD5.4 billion pipeline the company had targeted for completion in 2012. Keystone XL now represents 14 percent of TransCanada’s projects backed by contracts, down from 32 percent four years ago.

The northern portion would contribute an estimated CAD850 million a year in earnings before interest, taxes, depreciation and amortization (EBITDA. The southern leg of Keystone XL is forecast to contribute CAD250 million a year.

TransCanda’s proposed Energy East pipeline–from Alberta to the Atlantic Coast–would generate CAD1.7 billion.

Planned development by oil sands producers would double output versus 2012 levels to 4.5 million barrels per day by 2025. According to one estimate producers are planning to spend CAD30 billion per year through 2018 to develop the world’s third-largest crude reserves.

These producers expect/hope that Keystone XL will help narrow the spread between heavy crude prices and West Texas Intermediate prices by facilitating deliveries to refineries on the Gulf Coast. Heavy-crude differentials have narrowed of late due to increased use of crude-by-rail, but this method has its own set of environmental threats.

According to the president of Chevron Corp’s (NYSE: CVX) Canadian division, the heavy crude differential due to insufficient pipeline infrastructure costs the Canadian energy industry CAD50 million a day and about CAD18 billion a year in lost profits.

Canadian Natural, which has guided to a 14 percent increase in oil sands output in 2014 versus 2013, has 120,000 barrels a day of capacity booked on Keystone XL.

Suncor, which expects to boost its production by 10 percent in 2014 versus 2013, Cenovus and Exxon Mobil Corp’s (NYSE: XOM) 70 percent owned Imperial Oil Ltd (TSX: IMO, NYSE: IMO) have also made capacity commitments.

TransCanada, the least volatile stock among pipeline companies and global energy producers over the last five years, remains a solid investment for long-term earnings and dividend growth. Keystone XL won’t make or break the company. If it’s rejected the company will take a writedown; the company had spent about CAD2 billion on the project as of Sept. 30, 2013.

TransCanada is a buy under USD47.

Keystone XL won’t make or break the company. If it’s rejected the company will take a writedown; the company had spent about CAD2 billion on the project as of Sept. 30, 2013. But it’s still an important project for the industry, for Canadian oil sands as well as US Bakken Shale producers.

This week’s derailment and fire involving a Canadian National Railway (TSX: CNR, NYSE: CNI) train is just the latest in a series of incidents illustrating the potential dangers and negative environment impact of crude-by-rail.

The US government will certainly take notice of such incidents, within the larger context of continuing rapid growth in North American hydrocarbon production and the absence of sufficient pipeline infrastructure, in its evaluation of Keystone XL.

TransCanada won’t see significant upside from its approval.