Canada's Trade Surplus Narrows Sharply in July as Exports to US Slip

Canada's trade surplus contracted sharply in July, easing to C$769 million from a revised four-year high of C$4.2 billion in June, as exports of energy and metal products declined while imports climbed for a sixth straight month.

Statistics Canada reported that total exports fell 2.3% to C$76.14 billion, while imports rose 2.2% to C$75.37 billion. The drop in exports was led by metal and non-metallic mineral products, which shrank 8.5% after a strong June, and energy products, where crude oil shipments fell 5.5% on lower prices and volumes. Together, these categories account for more than 40% of Canada's total exports and declined 4.4% in July.

Excluding metals and energy, exports actually rose 0.6% during the month, helped by a 34.9% surge in aircraft and other transportation equipment.

The United States remained Canada's dominant trading partner, absorbing 66.35% of total exports in July, down from 69.39% in June and 72.64% a year earlier. Exports to the US dropped 6.6%, while imports from the US increased 1.8%, cutting Canada's surplus with its southern neighbour by more than 40% to C$5.9 billion.

Shipments to non-US markets rose 7.4%, narrowing Canada's trade deficit with the rest of the world to C$5.1 billion from C$6.1 billion. Stuart Bergman, chief economist at Export Development Canada, called the trend of keeping the US export share below 70% encouraging, noting that while "sheer gravity alone pulls exporters to the US market," there have been concerted efforts to diversify, citing rising agricultural exports such as canola to China and Japan.

The July figures mark Canada's fifth consecutive monthly trade surplus, a run of resilience despite more than a year of US tariffs. However, Washington's latest 50% duties, imposed last month, are expected to pose a stiffer test for exporters in the months ahead.