Canada posts record $7.1B trade deficit amid U.S. tariffs
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Canada’s merchandise trade deficit surged to an all-time high of $7.1 billion in April, driven by a sharp 15.7% drop in exports to the U.S., Statistics Canada reported Thursday. Overall exports fell 10.8% to $60.4 billion, the lowest since June 2023.
The trade surplus with the U.S. shrank to $3.6 billion — the smallest since December 2020 — as imports from the U.S. also fell 10.8%.
Andrew DiCapua, principal economist at the Canadian Chamber of Commerce, commented on the severity of the decline: “Exports are freefalling — now it’s a matter of whether there’s a cushion or concrete below. Nearly $15 billion in Canadian exports to the U.S. has disappeared since the start of the year — a staggering hit to Canada as a trading nation.”
Soft guidance, sharp reality
While exports to other countries increased 2.9% to $18.3 billion, imports from non-U.S. countries hit a record $29 billion, pushing Canada’s trade deficit with the rest of the world wider to $10.7 billion.
“As demand for Canadian goods weakens, the trade deficit is set to widen further,” DiCapua added. “Exporters are trying to pivot to new markets, but diversion simply isn’t viable in some key sectors. For the Bank of Canada, the first of many declines in the hard data is here, turning soft guidance into sharp reality.”
The growing deficit reflects the impact of U.S. tariffs and retaliatory Canadian tariffs that have disrupted trade, contributing to a significant downturn in Canada’s exports to its largest trading partner.
Exports of motor vehicles and parts fell 17.4%, with passenger cars and light trucks down 22.9%. Consumer goods dropped 15.4% and energy products 7.9%. Imports declined 3.5%, including a 17.7% fall in motor vehicles and parts imports.
