Canada July trade surplus shrinks, weeks before new U.S. tariffs

‌Canada's ​trade surplus sharply narrowed in July as exports of energy and metal products shrank while imports rose, data showed on Thursday, just weeks before a major escalation in trade dispute with its biggest trading partner the ‌United States.

The trade surplus was C$769 million (US$557 million), compared with a four-year high surplus of C$4.2 billion posted a month ago, Statistics Canada said. Economists polled by Reuters had forecast a surplus of C$3.57 billion in July.

Exports dropped 2.3%, while imports increased 2.2%. The July figures, which is Canada's fifth consecutive monthly ‌trade surplus, extended a run of relatively resilient Canadian trade despite more than a year and a half of U.S. tariffs.

However, Washington's 50% ‌new tariffs imposed by last month will provide a tougher test for exporters in the coming months. The decrease in exports in July was primarily led by energy products, which accounts for almost a quarter of Canada's total exports, and 95% of which usually flows south of the border.

Its value dropped 4.4% in July, a third consecutive monthly decline after ⁠exports ​of crude oil decreased by 5.5%, ⁠with both prices and volumes falling, StatsCan said. Exports of metal and non-metallic mineral products, which posted an increase of 15.8% in the prior month, also shrank by 8.5% in July.

As ⁠a result, Canada's total exports fell to C$76.14 billion, down from C$77.96 billion in June, but excluding metals and energy, exports increased 0.6% in July. The overall decrease ​in total exports in July was partially offset by higher exports of aircraft and other transportation equipment and parts, which surged by ⁠34.9%.

Imports rose in July to a value of C$75.37 billion, up from C$73.76 billion, StatsCan said, adding that it was the sixth consecutive monthly increase. This was led by an 11.4% ⁠increase ​in imports in motor vehicle and parts, mainly from the U.S.

Exports to the U.S. dropped 6.6% in July while imports from the country increased by 1.8%, shrinking Canada's trade surplus with its main trading partner by more than 40% to C$5.9 billion. U.S. accounted for 66.35% of ⁠Canada's total exports in July, underscoring a gradual decline in Canada's reliance on the U.S. market. The July figure was down from 69.39% in ⁠June and 72.64% a year ago.

However, Canada's ⁠import dependence on U.S. has narrowed to only 59% in the last 12 months as compared with 62% in 2024. Exports to countries other than the United States rose 7.4%, while imports increased 2.8%, leaving Canada ‌with a non-U.S. trade deficit ‌of C$5.1 billion, down from C$6.1 billion in the prior month.