| Consensus | Consensus Range | Actual | Previous | Revised | |
| Balance | C$-0.9B | C$-1.0B to C$-0.8B | C$-3.649B | C$-1.308B | C$-1.301B |
| Imports - M/M | -1.1% | 0.6% | 0.5% | ||
| Imports - Y/Y | -5.1% | -1.3% | -1.4% | ||
| Exports - M/M | -4.7% | 2.6% | 2.5% | ||
| Exports - Y/Y | -14.6% | -5.7% | -5.8% |
Highlights
Canada's merchandise trade deficit widened far more than expected in January, reaching C$3.649 billion in January from a gap of C$1.301 billion in December 2025. Forecasters in an Econoday survey had estimated the deficit at C$0.9 billion. In January, overall trade activity contracted, with exports declining faster than imports.
After rising 2.5 percent in December, exports contracted 4.7 percent on the month, the largest monthly decline since April 2025. On a 12-month basis, exports fell 14.6 percent in January after decreasing 5.8 percent in December. The retreat was related to weaker activity as reflected in the 5.8 percent decline in export volumes.
Imports fell 1.1 percent, with volumes down 2.2 percent.
The monthly export drop was led by a 21.2 percent plunge in motor vehicles and parts to C$5.4 billion, the lowest level since September 2021, leaving exports 40.4 percent below January 2025 level. In January, changes to car models resulted in longer production stoppages. Exports of metal and non-metallic mineral products contracted 8.0 percent after rising 17.9 percent in December as exports of unwrought gold to the UK decreased.
Overall, six of 11 export categories were down in January, including a 16.0 percent decrease in aircraft and other transportation equipment and parts and a 5.5 percent decline in consumer goods. On the upside, energy exports rose 4.1 percent, although they were still 11.7 percent lower than a year earlier. Natural gas exports were up 23.7 percent on the month as extreme winter conditions in the U.S. increased demand for Canadian natural gas.
On the import side, seven categories were down on the month, with the largest decline in energy, down 7.5 percent, for a year-over-year drop of 19.3 percent. Metal ores and non-metallic minerals declined 5.9 percent, although they were still up 27.7 percent year-over-year. Imports of motor vehicles and parts were down 4.5 percent. By contrast, farm, fishing and intermediate food products rose 8.5 percent and consumer goods edged up 0.4 percent.
Regionally, exports to the U.S., Canada's largest partner by far, declined 3.8 percent from December and imports contracted 3.4 percent. The surplus with the U.S. narrowed to C$5.4 billion from C$5.7 billion. Meanwhile, the deficit with other countries widened to C$9.0 billion from C$7.0 billion.
When also including services, Canada's total trade deficit with the world widened to C$3.8 billion from C$0.9 billion.
Market Consensus Before Announcement
The trade balance is seen barely in deficit at C$0.9 billion in January versus C$1.308 billion in December.
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.