Canada’s trade surplus with its largest trading partner, the United States, has widened before President-elect Donald Trump’s return to power. This development underscores the significant role the U.S. plays in Canada’s economy.
Trade Deficit Narrows
The surplus with the U.S. helped narrow Canada’s overall deficit. In November, total imports exceeded exports for the ninth consecutive month, resulting in a trade deficit of $323 million, down from $544 million in October, according to Statistics Canada’s report released on Tuesday.
Exports to U.S. Rise
Canada’s exports to the U.S. increased by 6.8% in November, while imports rose by 4.1%. The U.S. remains Canada’s largest trading partner, accounting for 76% of exports and 64% of imports.
Gold Shipments Contribute to Surplus
The widening surplus can be attributed in part to higher gold shipments to the U.S. Gold exports to Hong Kong also contributed to the increase.
Depreciation of Canadian Dollar Impacts Statistics
Statistics Canada warned that a Canada Border Services Agency initiative had delayed some October and November import data, leading to estimates being added to the collected values. The agency also flagged that the depreciation of the Canadian dollar since October has impacted import and export statistics.
Experts Weigh In
Benjamin Reitzes, rates and macro strategist at Bank of Montreal, stated in an email that "nothing here to change the view of another Bank of Canada cut in January, but things could get murky after that with the Canadian dollar already much weaker." Tariffs continue to be a dark cloud hanging over Canada and trade, he added.
Andrew DiCapua, senior economist at the Canadian Chamber of Commerce, noted that "Canada’s merchandise exports have gone up again, thanks to higher prices and a weaker dollar." However, he cautioned that pinpointing clear trends for the last few months of 2024 is challenging due to data collection changes.
Stephen Brown of Capital Economics told investors in a report that the third consecutive rise in export volumes in November provides further evidence that the economy was gaining momentum at the end of last year. He also noted that U.S. tariffs could cause the recovery to go into reverse this year, but that threat might provide some support in the near term if U.S. importers try to front-run the tariffs.
Economic Uncertainty Ahead
The Canadian economy faces uncertainty ahead, with Trump’s return to power potentially leading to increased trade tensions and economic instability. Economists and experts will closely monitor developments as they unfold.
Recommended Articles
- Pierre Poilievre makes energy pitch to Trump
- Trump’s tariff threat and Canadian severance negotiations
Share Your Thoughts
Join the discussion by sharing your thoughts on this article. Please keep comments relevant and respectful.
Create an Account or Sign in to join the conversation.
Postmedia is committed to maintaining a lively but civil forum for discussion. Please review our Community Guidelines before participating.
