Narrowed Trade Deficit in March Despite Continued Tariff Tensions
In March 2025, Canada’s merchandise trade deficit narrowed significantly, decreasing from $1.4 billion in February to $506 million.1 Both exports and imports declined for the month—exports dipped 0.2%, while imports saw a larger drop of 1.5%. The implementation of new tariffs and digital reporting adjustments influenced the data. Despite the monthly drop, first-quarter figures reached record highs, with a quarterly surplus of $1.2 billion in goods trade. Service trade also contributed, with a total international trade deficit (goods and services combined) narrowing to $942 million in March.
Exports Slip Slightly, But Real Volume Rises
March marked the second consecutive monthly decline in exports, down 0.2% following a 5.4% drop in February. However, real export volumes were up 1.8% for the month, indicating that lower prices rather than reduced activity drove the decline. On a year-over-year basis, exports were up 10.2%. Key declines came in consumer goods, energy, and pharmaceuticals, while motor vehicles and parts rebounded strongly. Exports to non-U.S. countries rose 24.8%, helping offset a 6.6% decline in exports to the United States.
Imports Down After Five-Month Rise
Total imports fell 1.5% in March, the first monthly decrease since September 2024. In real terms, imports edged down just 0.1%, with the most significant declines seen in metal and non-metallic mineral products (-15.8%) and energy products (-18.8%). March figures reflect estimates added due to delays tied to the CARM digital initiative, which may lead to future revisions. Quarterly imports reached a record $212.8 billion, up 5.2%, with growth driven by motor vehicles, machinery, and consumer goods.
U.S. Surplus Shrinks, Global Deficit Narrows
Canada’s merchandise trade surplus with the United States decreased from $10.8 billion in February to $8.4 billion in March, impacted by new tariffs. Exports to the U.S. dropped 6.6%, while imports fell 2.9%. In contrast, the trade deficit with countries other than the United States improved, narrowing from a record $12.2 billion to $9.0 billion, as exports surged nearly 25%. These shifts highlight Canada’s continued reliance on U.S. trade, though diversification efforts showed promise with expanded global export activity.
Industry Trade Breakdown
Farm, fishing and intermediate food products
Exports $5.1B, up 3.1%
Imports $2.9B, up 0.1%
Basic and industrial chemical, plastic and rubber products
Exports $3.5B, down 0.5%
Imports $5.5B, up 1.7%
Forestry products and building and packaging materials
Exports $4.2B, up 3.5%
Imports $3.2B, down 0.2%
Industrial machinery, equipment and parts
Exports $4.8B, up 2.1%
Imports $8.3B, up 2%
Electronic and electrical equipment and parts
Exports $3.2B, down 0.5%
Imports $8.3B, up 0.5%
Consumer goods
Exports $8.2B, down 4.2%
Imports $14.6B, up 1.3%
Cited Sources
1 Government of Canada, Statistics Canada. “Canadian International Merchandise Trade, March 2025.” The Daily – , May 6, 2025. https://www150.statcan.gc.ca/n1/daily-quotidien/250506/dq250506a-eng.htm.