The influence of the terms of trade on the Canadian economy has not received much attention as a source of change. [...] This paper examines the measurement and interpretation of the terms of trade, the factors that led to its recent change and the impact of this shift on the economy. [...] Although the paper focuses on the terms of trade, incorporating changes in them into the analysis captures only part of a larger, ongoing restructuring the Canadian economy. [...] Measuring the terms of trade and their impact The terms of trade – the price of exports relative to the price of imports –are one of the least discussed sources of change in Canadian living standards. [...] When the price of oil increases, the oil sold to the United States makes more money for the Canadian oil company and the incomes of its employees and owners rise.