Canada July trade surplus shrinks; US exports drop

Canada's trade surplus narrowed significantly in July as exports of energy and metal products decreased while imports rose, just weeks before new 50% tariffs from the US were set to affect statistics. The surplus was C$769 million (US$557 million), down from a four-year high of C$4.2 billion the previous month, according to Statistics Canada.

Economists had predicted a C$3.57 billion surplus in July. Exports dropped 2.3%, while imports increased 2.2%. Increased imports were driven by an 11.4% rise in motor vehicles and parts from the US. Despite trading with the US accounting for 66.35% of Canada's total exports in July, a decrease from 69.39% in June and 72.64% a year ago, Canada's import dependence on the US only narrowed slightly to 59% over the past year.

The decrease in exports was primarily due to a 4.4% drop in energy exports, which make up almost a quarter of Canada's total exports, and a 8.5% decline in metal and non-metallic mineral products exports. However, exports of aircraft and other transportation equipment surged by 34.9%. Imports rose to C$75.37 billion, up from C$73.76 billion, marking the sixth consecutive monthly increase.

Stuart Bergman, chief economist at Export Development Canada, noted that maintaining the share of Canada's exports to the US below 70% is an encouraging trend.