| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | C$-3.750B | C$-6.100B to C$-2.900B | C$-4.937B | C$-5.9B | C$-5.981B |
| Imports - M/M | -0.7% | 1.4% | 0.8% | ||
| Imports - Y/Y | 2.3% | 2.1% | 1.6% | ||
| Exports - M/M | 0.9% | 0.9% | 0.1% | ||
| Exports - Y/Y | -4.8% | -5.9% | -6.6% |
Highlights
Canada's merchandise trade deficit narrowed to C$4.9 billion in July from C$6.0 billion in June, as exports increased while imports contracted. The deficit was still wider than the C$3.75 billion gap expected by forecasters in an Econoday survey.
Exports increased 0.9 percent in July after edging up 0.1 percent in June, with gains in 7 of 11 categories. Export volumes were up 1.6 percent, reflecting stronger trade activity. Energy exports recovered 4.2 percent after five consecutive monthly declines. Motor vehicles and parts also boosted exports on the month, with a 6.6 percent increase. While July is usually marked by assembly plant closures, the production slowdown partly due to U.S. tariffs tamed the effects of seasonal stoppages. As a result, exports of passenger cars and light trucks soared 10.8 percent.
On the downside, exports of metal and non-metallic mineral products decreased 8.0 percent in July, led by unwrought gold, silver, and platinum group metals and their alloys, which mostly reflects unwrought gold. Still, unwrought gold exports were more than 25% higher than a year earlier.
In the second quarter, exports of goods plunged 7.5 percent after increasing 1.4% in the first quarter. On an annualized basis, the export drop was 26.8 percent, trimming real GDP by 9.79 percentage points. Second quarter GDP contracted 1.575 percent, slightly more than the 1.5 percent projected by the Bank of Canada. Still, the GDP contraction revived expectations of a rate cut at the September policy meeting. Under its current scenario, where Canada and China retaliatory tariffs are assumed to be permanent, while other countries are assumed to not retaliate, the Bank of Canada projects a stabilization in exports in the second half of the year. Today's data are in line with this projection.
Imports were down 0.7 percent in July, mostly offsetting the previous month's increase of 0.8 percent, dampened by a 18.8 percent drop in industrial machinery, equipment and parts that were boosted in June by a one-time large import. Excluding this category, imports increased 2.2 percent on the month, with widespread gains across 10 of 11 categories. Aircraft and other transportation equipment and parts (up 11.0 percent), motor vehicles and parts (2.2 percent), consumer goods (1.6 percent) and farm, fishing and intermediate food products (7.8 percent) were among the largest upward contributors. Total import volumes fell 0.9 percent.
Regionally, imports from the U.S. fell 2.2 percent while exports rose 5.0 percent, leading to a surplus of C$6.7 billion, up from C$3.7 billion in June, marking the largest surplus since March 2025. Meanwhile, Canada's trade deficit with countries other than the U.S. widened to C$11.7 billion in July from C$9.7 billion in June.
When combining international trade in goods and services, Canada's total trade deficit with the world narrowed to C$4.4 billion in July from C$6.2 billion in June.
Exports increased 0.9 percent in July after edging up 0.1 percent in June, with gains in 7 of 11 categories. Export volumes were up 1.6 percent, reflecting stronger trade activity. Energy exports recovered 4.2 percent after five consecutive monthly declines. Motor vehicles and parts also boosted exports on the month, with a 6.6 percent increase. While July is usually marked by assembly plant closures, the production slowdown partly due to U.S. tariffs tamed the effects of seasonal stoppages. As a result, exports of passenger cars and light trucks soared 10.8 percent.
On the downside, exports of metal and non-metallic mineral products decreased 8.0 percent in July, led by unwrought gold, silver, and platinum group metals and their alloys, which mostly reflects unwrought gold. Still, unwrought gold exports were more than 25% higher than a year earlier.
In the second quarter, exports of goods plunged 7.5 percent after increasing 1.4% in the first quarter. On an annualized basis, the export drop was 26.8 percent, trimming real GDP by 9.79 percentage points. Second quarter GDP contracted 1.575 percent, slightly more than the 1.5 percent projected by the Bank of Canada. Still, the GDP contraction revived expectations of a rate cut at the September policy meeting. Under its current scenario, where Canada and China retaliatory tariffs are assumed to be permanent, while other countries are assumed to not retaliate, the Bank of Canada projects a stabilization in exports in the second half of the year. Today's data are in line with this projection.
Imports were down 0.7 percent in July, mostly offsetting the previous month's increase of 0.8 percent, dampened by a 18.8 percent drop in industrial machinery, equipment and parts that were boosted in June by a one-time large import. Excluding this category, imports increased 2.2 percent on the month, with widespread gains across 10 of 11 categories. Aircraft and other transportation equipment and parts (up 11.0 percent), motor vehicles and parts (2.2 percent), consumer goods (1.6 percent) and farm, fishing and intermediate food products (7.8 percent) were among the largest upward contributors. Total import volumes fell 0.9 percent.
Regionally, imports from the U.S. fell 2.2 percent while exports rose 5.0 percent, leading to a surplus of C$6.7 billion, up from C$3.7 billion in June, marking the largest surplus since March 2025. Meanwhile, Canada's trade deficit with countries other than the U.S. widened to C$11.7 billion in July from C$9.7 billion in June.
When combining international trade in goods and services, Canada's total trade deficit with the world narrowed to C$4.4 billion in July from C$6.2 billion in June.
Definition
The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness. Nominal data are supplied with regards to principal trading partners and product classification.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets. This is particularly true for Canada which relies on exports and particularly those to the U.S. for growth. It should be noted that this report focuses solely on goods trade - it leaves services trade for the quarterly national accounts and balance of payments reports.
Imports indicate demand for foreign goods while exports show the demand for Canadian goods in the U.S. and elsewhere. The Canadian dollar is particularly sensitive to changes in its trade balance with the U.S. For the most part, Canada's trade balance is in surplus thanks to its exports to the U.S. Both the nominal export and import values are split into volume (real) and price components. This permits trade data to be analyzed for both changes in trade patterns as well as changing prices. This has been particularly important of late given energy price volatility and the impact on Canada's merchandise shipments. A word of caution -- the data are subject to large monthly revisions. Therefore, it can be misleading to form opinions on the basis of one month's data.
The bond market is sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Imports indicate demand for foreign goods while exports show the demand for Canadian goods in the U.S. and elsewhere. The Canadian dollar is particularly sensitive to changes in its trade balance with the U.S. For the most part, Canada's trade balance is in surplus thanks to its exports to the U.S. Both the nominal export and import values are split into volume (real) and price components. This permits trade data to be analyzed for both changes in trade patterns as well as changing prices. This has been particularly important of late given energy price volatility and the impact on Canada's merchandise shipments. A word of caution -- the data are subject to large monthly revisions. Therefore, it can be misleading to form opinions on the basis of one month's data.
The bond market is sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
