Canada's Trade Deficit Widens Sharply, Exceeds Expectations

This deterioration was primarily driven by a 4.7% month-over-month decline in exports, which totaled C$62.48 billion. Key contributors to this export slump included a sharp 21.2% drop in motor vehicle and parts shipments, largely due to production stoppages, and a 16.0% decrease in aircraft and other transportation equipment exports.

While energy product exports, particularly natural gas, saw a 4.1% increase, they only partially offset these declines. Exports to the United States also decreased by 3.8%.

Imports, meanwhile, saw a more modest 1.1% reduction to C$66.13 billion, led by lower purchases of motor vehicles and parts (-4.5%) and electronic equipment (-3.6%), despite a rise in industrial machinery imports. Consequently, Canada's trade surplus with the US narrowed to C$5.4 billion, while its deficit with non-US countries expanded to C$9.0 billion.

This data points to weakening external demand and domestic supply chain challenges impacting Canada's trade performance.