| Consensus | Consensus Range | Actual | Previous | Revised | |
| Balance | C$-2.0B | C$-2.4B to C$-1.4B | C$-1.308B | C$-2.197B | C$-2.585B |
| Imports - M/M | 0.6% | -0.1% | 0.6% | ||
| Imports - Y/Y | -1.3% | -0.7% | -0.1% | ||
| Exports - M/M | 2.6% | -2.8% | -2.2% | ||
| Exports - Y/Y | -5.7% | -3.1% |
Highlights
Canada's merchandise trade deficit narrowed to C$1.308 billion in December from a C$2.585 billion gap in November as export growth outpaced import growth over the month. Forecasters in an Econoday survey had expected a deficit of C$2.0 billion.
Exports increased 2.6 percent over the month, with volumes up 1.4 percent. Exports were still down 5.7 percent from a year earlier.
Imports, meanwhile, increased just 0.6 percent, with gains across 6 of 11 sections. Still, volumes increased 1.4 percent on the month.
In December, the Canadian dollar's average value increased 1.3 cents US from November, the largest monthly gain since January 2025. Expressed in U.S. dollars, exports were up 4.5 percent and imports 2.4 percent.
Exports also outpaced imports over the fourth quarter, as they increased 3.9 percent, while imports rose 1.2 percent. In volume, more relevant to GDP, exports expanded 2.1 percent and imports 0.3 percent.
Overall, annual exports edged down 0.2 percent in 2025, while imports rose 2.8 percent. Canada posted its third consecutive deficit last year, which widened to C$31.3 billion, the largest since 2020, after trade gaps of C$7.2 billion in 2024 and C$0.9 billion in 2023. Exports to the U.S. fell 5.8 percent in 2025 and imports were down 2.9 percent.
In December, export gains were concentrated in four categories, with the largest increase in metal and non-metallic mineral products, up 18.0 percent after dropping 20.9 percent in November, led by a rebound in gold. Excluding this category, exports actually contracted 0.2 percent. In 2025, exports of unwrought gold, silver, and platinum group metals, and their alloys surged 41.7 percent from 2024.
Also boosting exports was a 20.5 percent increase in aircraft and other transportation equipment and parts, which reached a record high level of C$3.5 billion in December. By contrast, energy products fell 1.0 percent.
On the import front, motor vehicles and parts rose 5.1 percent, metal and non-metallic mineral products 7.7 percent, and metal ores and non-metallic minerals 16.4 percent. On the downside, consumer goods imports were down 4.5 percent, basic and industrial chemical, plastic and rubber products down 4.7 percent, and farm, fishing and intermediate food products down 7.3 percent.
Regionally, exports to the U.S. increased 1.1 percent and imports 3.5 percent, leading to a narrowing surplus that reached C$5.7 billion in December, down from C$6.5 billion in November.
Canada's trade deficit with countries other than the United States narrowed to C$7.0 billion in December from C$9.0 billion the previous month, with exports up 5.8 percent to a record high, while imports fell 3.0 percent.
When also factoring in services exports (up 0.8 percent) and imports (down 2.2 percent), Canada's total trade deficit in goods and services with the world narrowed to C$575 million in December from C$2.5 billion in November.
Market Consensus Before Announcement
The consensus sees another deficit of C$2.0 billion in December after a C$2.197 billion deficit in November.
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.