Canada’s merchandise trade deficit with the world expanded to $3.7 billion in June, according to new numbers from Statistics Canada.1 Exports were down 2.2% as imports dipped 0.5%.
Exports Down in 9 of 11 Categories
The 2.2% decrease in exports follows a 3% drop a month earlier in May. Total exports in real (or volume) terms fell 1.1%. Export prices fell for the 11th time in 12 months, adding up to a 14.2% decrease in the past year, meaning exports in real terms actually increased during this time.
Metal and non-metallic mineral products decreased 8% in June, mainly as a result of lower exports of unwrought gold, silver, and platinum metals, and their alloys. In particular, shipments of unwrought gold to the US and Hong Kong were down.
Lower export levels were also seen in industrial machinery, equipment, and parts (-5%), basic and industrial chemical, plastic and rubber products (-5.7%) and farm, fishing, and intermediate food products (-4.4%)
Imports Down in 7 of 11 Categories
Total imports decreased 0.5% in June, after having risen 3% in May. Imports were up 0.9% in real terms. 7 of 11 product sections saw declines, but these were largely offset by the increase in imports of unwrought gold, silver, and platinum group metals and their alloys (+73.9%).
Energy product imports were down by 13% in June, with refined petroleum energy products dipping 17% on the weaker imports of motor gasoline. Crude oil imports were down 9.5%, after having spiked 23.2% in May.
A 7.2% decrease in the import of pharmaceutical products contributed to a 1.9% dip in the larger category of consumer goods.
Imports of metal and non-metallic mineral products were up 12.9%.
Trade Deficit with Countries Other than U.S. Hits Record High
Exports to countries other than the U.S. decreased 5.5% in June, while imports from these countries slipped 0.1%. Canada’s merchandise trade deficit with countries other than the US rose from $10.4 billion in May to $11.2 billion in June, a new all-time high for that category.
Exports to the U.S. were down 1.2% in June, with imports decreasing 0.7%. Canada’s trade surplus with the U.S. contracted from $7.7 billion in May to $7.4 billion in June.
Vancouver Port Strike and Halifax Flooding
A labour disruption impacted activity at B.C. marine terminals for 13 days beginning on July 1. Rainfall in Halifax on July 21 damaged a section of rail line. The impact of these events will be felt in July trade numbers, which will be published on September 6.
Port Labour Disruptions to Cause Lasting Damage?
The many twists and turns of the B.C. port strike have had economic implications that stretch far beyond the shoreline.
“I think it’s diabolically bad,” says CA President William McKinnon.2 “The disrespect that the union and the employer have shown for the customer is terrible. The lockout has cost hundreds of millions of dollars in lost sales and productivity.”
McKinnon believes that the negative implications for the Port of Vancouver will continue on past the labour disruption itself.
“From a global perspective we are doing harm to our reputation. I think that some businesses don’t come here because of that instability,” he says.
McKinnon would have liked to have seen government intervention in the situation.
“The Liberal government took a really passive approach to this. The Prime Minister’s Office has levers in their tool kit that could have forced a resolution within two days of the strike onset. Instead, they sent out the Labour Minister to broker a deal that fell apart.
With all of this disruption McKinnon still believes that the Port of Vancouver does have a lot going for it.
“We have financial stability here,” he says. “We also have expanding port infrastructure. Not many ports on the West Coast can do that, so we have a real strategic advantage. Combine that with rail capacity, which can be added to, and that’s a good place to be.”
International Instability Impacting Trade Strategies?
International trade news constantly reminds us that companies must remain vigilant with regards to their supply chain strategies. Russia’s reneging of its grain deal with Ukraine3 and the US protectionist policies with regards to electric vehicle manufacturing4 are just two examples recently making news.
McKinnon advises clients to manage their supply chains carefully. To this end, Canadian Alliance is expanding our warehousing network and forming partnerships with like-minded companies that cover Canada & the US.
“We’re here to provide solutions for our customers,” says McKinnon. “We can help them increase their sales profile through expansion into new markets. We never would have been able to do that without some of the tools and partnerships we’ve developed.”
Are Canadian Companies Utilizing an Ethical Supply Chain?
According to a report by World Vision Canada, one in every 13 imported products that come into Canada could be made by an enslaved labourer.5 Canada’s corporate watchdog is now investigating allegations against Nike and Dynasty Gold. Is it enough?
“World Vision does a lot of responsible things around the world,” says McKinnon. “I think Canadian businesses need to work more closely with organizations like this to ferret out bad actors. I also think the Canadian government needs to be involved.”
McKinnon is optimistic that technologies such as blockchain can help illuminate supply chains and target exploitative behaviour, but he knows these advances have their limits.
“It’s still possible for businesses to cover up what’s happening in these locations,” he says. “Operations are often hidden behind closed doors. The problem is that a lot of these behaviours happen in countries where there’s not a lot of democratic will to eliminate them. There’s a financial incentive for companies to turn a blind eye.”
He believes that businesses here must take a greater responsibility for ensuring their overseas partners are operating ethically.
“Consumerism and price sensitivity drives a lot of this, but there’s enough money in the Western world to help people out in this regard,” he says. “If you wouldn’t do it in Canada, why would you want to work with companies that do it elsewhere?”
Cited Sources
1 Government of Canada, Statistics Canada. “Canadian International Merchandise Trade, June 2023.” The Daily – , August 8, 2023. https://www150.statcan.gc.ca/n1/daily-quotidien/230808/dq230808a-eng.htm.
2 Direct communications with William McKinnon
3 Nichols, Michelle. “Russia Could Be Ready for Black Sea Grain Deal Talks, but No Evidence yet, US Says.” Reuters, August 1, 2023. https://www.reuters.com/markets/commodities/us-says-signals-russia-prepared-return-black-sea-grain-deal-talks-2023-08-01/.
4 “A Fight over the Future of Electric Vehicles Is Unfolding in Washington. Canadians Are Involved | CBC News.” CBCnews, July 3, 2023. https://www.cbc.ca/news/world/ev-regulations-inflation-reduction-act-analysis-1.6894282.
5 “What Is Canada Doing to Crack down on Goods Produced Using Forced Labour? | CBC News.” CBCnews, July 12, 2023. https://www.cbc.ca/news/world/labour-regulations-explainer-1.6903851.