Canada Exports to US Keep Falling as Tariffs Curb Shipments
[Stay on top of transportation news: .]
Canada’s share of exports destined for the U.S. shrank to the smallest proportion since at least 1997, excluding the COVID pandemic. Shipments to other countries reached a new high, led by gold exports.
With President Donald Trump’s tariffs crushing exports and imports between Canada and its biggest trading partner, the country’s share of exports destined for the U.S. shrank to 68.3% in May, from last year’s monthly average of 75.9%, according to Statistics Canada data July 3.
Exports to the U.S. were down for a fourth straight month, declining 0.9% in May. Canadian businesses and consumers were also buying fewer cars and other products from the U.S., with imports falling 1.2%, a third straight monthly drop.
Canada exports most of the cars it makes to the U.S. While the country’s shipments of cars and parts rose 0.9% in May from a month earlier, shipments plunged 8.4% from a year ago. Prime Minister Mark Carney met July 2 with auto industry representatives to discuss trade negotiations with the U.S.
READ MORE:Canada Faces Steel Job Cuts as US Tariff Pressure Mounts
Canada’s goods trade surplus with the U.S. widened slightly to C$3.2 billion ($2.4 billion) in May, from C$3.1 billion in April.
“Canada-U.S. trade is stuck in a lull and it is unlikely to improve for a while. Activity in both directions has slowed, and the drop in imports, especially for integrated trade like energy and manufacturing, is a warning sign that exports could be impacted in the coming months,” Andrew DiCapua, principal economist at the Canadian Chamber of Commerce, said in an email.
Exports to countries other than the U.S., however, surged to a record high, led by higher shipments of gold to the U.K., crude oil to Singapore and unwrought aluminum and pharmaceutical products to Italy. Canada’s trade deficit with countries excluding the U.S. narrowed to C$9.1 billion in May, from C$10.7 billion in April.
Higher shipments elsewhere helped narrow Canada’s trade deficit to C$5.9 billion in May, from a record C$7.6 billion in April. May’s smaller trade gap was in line with the median projection in a Bloomberg survey of economists.
Alexandra Brown, economist at Capital Economics Ltd., called the increased shipments to non-U.S. destinations “a small consolation,” saying in a report to investors that “the outlook for exports continues to be weak.”
Want more news? Listen to today's daily briefing above or go here for more info
Total exports rose 1.1% in May, the first increase since January, led by higher gold shipments. However, excluding metal and non-metallic mineral products, exports were down 1.2%. Exports of consumer goods rose 2.6% due to higher pork exports to Japan. A 5.6% decrease in energy exports partially offset some of the gains.
Total imports were down 1.6% in May, the third consecutive monthly decline, led by lower inbound shipments of unwrought gold, which saw a strong increase in April when imports from U.S. surged. Imports of cars and parts fell 5.3%, with passenger cars and light trucks dropping 9.7% to the lowest level in more than two years.
In volume terms, total exports were up 0.7%, and imports fell 0.6%.
