In a surprising turn of events, Canada recorded a modest international trade surplus in September, breaking a streak of seven consecutive months of deficits. This unexpected development comes as a breath of fresh air for the country’s international trade scenario.
Canada’s Unexpected Trade Surplus
Canada registered a marginal trade surplus of $153-million in September, a significant shift from the $6.43-billion deficit recorded in the previous month, according to data from Statistics Canada. This marked the first surplus since the imposition of tariffs on key sectors by President Donald Trump, which significantly affected Canada’s exports to the U.S., its largest trading partner. The bulk of this surplus was attributed to a 44% increase in Canada’s trade surplus with the U.S.
Delayed Data Due to U.S. Government Shutdown
The September trade data, which was initially due in November, faced delays as Canadian export information to the U.S. was unavailable due to the 43-day government shutdown in the U.S. Despite this setback, analysts and economists have commended Canada’s performance, stating that the trade numbers indicate a normalization of the country’s international merchandise trade.
Positive Outlook for Canada
“The overall story is really positive,” said Prince Owusu, a senior economist with Export Development Canada. He also suggested that the trade flow with the United States is beginning to stabilize, and the trend of diversification from the U.S. is continuing.
Canada’s Export Growth in September
Data from Statistics Canada reveals that Canada’s total exports in September grew by 6.3 per cent to $64.23-billion, bouncing back from a 3.2 per cent drop in August. This growth was driven by higher exports in nine out of 11 product sections, marking the largest percentage increase since February 2024. Notably, exports of metal and non-metallic mineral products and aircraft and transportation equipment and parts led the gains with a rise of over 20 per cent in exports. Canada’s total merchandise imports, on the other hand, dropped by 4.1 per cent in September to $64.08-billion.
Rise in Exports to the U.S.
Exports to the U.S. grew by 4.6 per cent in September to $45.84-billion, aided by outbound shipments of aircraft, light trucks and unwrought gold. Consequently, the U.S. accounted for over 71 per cent of Canada’s exports in September. Meanwhile, imports from the U.S. saw a decrease of 1.7 per cent in September, marking the third consecutive month of decline. This situation contributed to Canada’s trade surplus with the U.S., taking it to its highest level since February.
Trade Relations with Other Countries
Canada’s exports to countries other than the U.S. were also on the rise, led by higher shipments of unwrought gold, crude oil and aircraft. However, imports from countries other than the U.S. saw a decrease of 7.3 per cent. As a result, Canada’s trade deficit with countries other than the United States has narrowed significantly, posting the lowest deficit since October 2024.
Impact on the Canadian Dollar
The surprising trade surplus had a positive effect on the Canadian dollar, which firmed up in early trade and was trading up by 0.2 per cent to 1.3767 to the U.S. dollar, or 72.64 U.S. cents. In addition, yields on the two-year government bonds were down 0.2 basis points to 2.524 per cent.
