US President Donald Trump admitted making up figures in a meeting with Prime Minister Justin Trudeau, according to the Washington Post.
At a private fundraiser, he reportedly said he insisted to Mr Trudeau the US had a trade deficit with Canada, though he had "no idea" if it was true.
Mr Trump maintained in a tweet the US does have a trade deficit with Canada.
But the US Department of Commerce says the US ran a $2.8bn (£2bn) trade surplus with Canada in 2017.
On Thursday morning, Mr Trump defended his trade deficit stance.
We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive). P.M. Justin Trudeau of Canada, a very good guy, doesn’t like saying that Canada has a Surplus vs. the U.S.(negotiating), but they do...they almost all do...and that’s how I know!— Donald J. Trump (@realDonaldTrump) March 15, 2018
"We do have a trade deficit with Canada, as we do with almost all countries (some of them massive)," the US leader tweeted.
The Post said it had obtained audio from a 30-minute speech that Mr Trump gave at a private fundraiser in the US state of Missouri on Wednesday night.
Imitating the Canadian leader, Mr Trump reportedly said: "Trudeau came to see me. He's a good guy, Justin. He said, 'No, no, we have no trade deficit with you, we have none. Donald, please.'
"Nice guy, good-looking guy, comes in - 'Donald, we have no trade deficit.' He's very proud because everybody else, you know, we're getting killed."
The president continued: "I said, 'Wrong, Justin, you do.' I didn't even know. I had no idea. I just said, 'You're wrong.'"
Mr Trump then reportedly said he asked a member of his staff to check if the US did indeed have a deficit with its northern neighbour.
"I sent one of our guys out, his guy, my guy, they went out, I said, 'Check, because I can't believe it,'" Mr Trump said.
"'Well, sir, you're actually right. We have no deficit, but that doesn't include energy and timber," said the president. "And when you do, we lose $17 billion a year.' It's incredible."
That figure appears to refer to the US-Canada trade balance if services are removed from the calculation and only goods traded are accounted for, though Mr Trump's tweet did not make this distinction.
The Canadian foreign ministry spokesman Adam Austin said in a statement: "Canada and the United States have a balanced and mutually beneficial trading relationship.
"According to their own statistics, the US runs a trade surplus with Canada."
However you measure it, the deficit is a small fraction of the hundreds of billions in business done between the two countries, says the BBC's New York business reporter Natalie Sherman.
The White House has not yet commented on the report that the president made up figures during a discussion with a key US ally.
It is not clear when the meeting reportedly referred to by Mr Trump occurred.
US officials are currently attempting to negotiate an overhaul of the North American Free Trade Agreement with their counterparts in Canada and Mexico.