Canada’s Trade Surplus Reaches Highest Level Since 2022
In January, Canada’s merchandise trade surplus widened significantly, reaching $4.0 billion, up from a revised $1.7 billion in December.1 This marks the largest trade surplus since May 2022. Both exports and imports increased for the fourth consecutive month, with exports rising 5.5% and imports up 2.3%, both hitting record highs. This according to numbers released Mar 6 by Statistics Canada.
It’s important to remember that this trade activity occurred amid tariff threats from the United States, but prior to any tariffs actually taking effect. Trade flows were potentially influenced by these circumstances. Anecdotal evidence suggests that many Canadian exporters rushed to send inventory southward before potential U.S. tariffs took effect. Analysts will be keen to review data that becomes available in subsequent months, as a dynamic trade situation continues to unfold.
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Exports Surge on Auto and Energy Growth
Total exports increased 5.5% in January, following a 6.0% rise in December, reaching a record $74.5 billion. In real terms, exports grew 4.5%, with the declining Canadian dollar contributing to higher values. The strongest gains came from motor vehicles and parts (+12.5%), with passenger cars and light trucks up 17.1%, reaching their highest level since May 2019. Energy exports also rose 4.8%, driven by crude oil (+2.9%) and natural gas (+28.7%), supported by higher prices. Other significant contributors included consumer goods (+7.8%), pharmaceutical products (+41.5%), and industrial machinery (+12.6%).
Imports Rise, Led by Aircraft and Energy Products
Imports increased 2.3% in January, following a 2.6% rise in December. In real terms, imports grew 1.5%. The largest contributors to the increase were aircraft and other transportation equipment (+23.6%), electronic and electrical equipment (+5.8%), and energy products (+8.5%). Due to reporting delays related to the CBSA’s digital initiative, estimates were incorporated into import data, which may lead to revisions in future reports. While imports reached record levels, the increase was more modest compared to exports, contributing to the widening trade surplus.
Record Trade Surplus with the U.S., Deficit with the Rest of the World Narrows
Canada’s trade surplus with the United States grew to a record $14.4 billion in January, as exports to the U.S. surged 7.5% while imports rose 4.7%. This growth coincided with tariff threats from the U.S., which may have prompted higher shipments. Meanwhile, exports to countries outside the U.S. declined by 1.0%, with lower shipments to Switzerland, South Korea, and Germany offset by increased exports to China. Imports from non-U.S. countries fell 1.4%, narrowing Canada’s trade deficit with the rest of the world slightly from $10.6 billion in December to $10.4 billion in January.
Industry Trade Breakdown
Farm, fishing and intermediate food products
Exports $5.4B, up 1.1%
Imports $2.9B, up 2.3%
Basic and industrial chemical, plastic and rubber products
Exports $3.7B, down 2%
Imports $5.6 B, up 4.5%
Forestry products and building and packaging materials
Exports $4.6B, up 6.3%
Imports $3.3B, up 3.9%
Industrial machinery, equipment and parts
Exports $5B, up 12.6%
Imports $7.9B, up 3%
Electronic and electrical equipment and parts
Exports $3.2B, up 5.8%
Imports $7.9B, up 5.8%
Consumer goods
Exports $8.9B, up 7.8%
Imports $14.7B, down 1.4%
Canadian Alliance Terminals is more than a warehouse, we’re logistics and transportation consulting experts. Contact us today and let us assist you with re-optimizing your supply chain to address new realities.