Canada's Trade Deficit Narrows, But Tariffs Weigh on Exports

Strategic Insights -

Canada's trade deficit with the world narrowed in May to $5.9-billion from a record high of $7.6-billion in April, but tariffs continued to weigh on exports to the United States, raising the stakes for trade negotiations between Ottawa and Washington. The deficit was marked by a 0.9 per cent decline in exports to the U.S., following a 16-per-cent drop in April, as the White House targets certain sectors of the Canadian economy with punishing tariffs. The share of exports destined for the U.S. was 68.3 per cent in May, one of the lowest proportions on record.

Key Takeaways:

  • The trade deficit in Canada fell to $5.9-billion in May, down from a record high of $7.6-billion in April.
  • Exports to the United States declined by 0.9 per cent in May, following a 16-per-cent drop in April, as the White House imposes tariffs on steel, aluminum, and automobiles.
  • The share of exports destined for the U.S. was 68.3 per cent in May, one of the lowest proportions on record.
  • Total imports fell by 1.6 per cent in May, marking the third consecutive decrease.
  • Canadian exports were boosted by a sharp increase in gold shipments to Britain, but remained under pressure due to U.S. tariffs.
  • Prime Minister Mark Carney is negotiating an economic and security agreement with the United States by July 21, in hopes of securing a break from tariffs for Canadian businesses.
  • The U.S.'s trade deficit widened in May to $71.5-billion, up from $60.3-billion in April.

Statistics:

  • The trade deficit in Canada narrowed to $5.9-billion in May.
  • Exports to the United States declined by 0.9 per cent in May, following a 16-per-cent drop in April.
  • The share of exports destined for the U.S. was 68.3 per cent in May.
  • Total imports fell by 1.6 per cent in May, marking the third consecutive decrease.
  • The U.S.'s trade deficit widened in May to $71.5-billion, up from $60.3-billion in April.
  • Canadian exports rose 1.1 per cent in May, driven by a sharp increase in gold shipments to Britain.

Sources:

  • Statistics Canada
  • Bank of Montreal
  • Capital Economics
  • CIBC
  • Globe and Mail
  • White House
  • U.S. Commerce Department's Bureau of Economic Analysis