Shipping activity at the Port of Vancouver. Exports have been modestly rising over the last three months after taking a major hit in April as tariffs came into effect.Isabella Falsetti/The Globe and Mail
Canadian exports rose for the third consecutive month in July, narrowing the country’s trade deficit with the world and increasing its trade surplus with the United States.
Statistics Canada reported on Thursday that exports rose 0.9 per cent, while imports fell by 0.7 per cent, reducing Canada’s trade deficit to $4.9-billion from $6-billion.
Exports have been modestly rising over the last three months after taking a major hit in April as tariffs came into effect. As a result, economists expect net trade to boost economic growth in the third quarter, despite the ongoing impact of U.S. tariffs on strategic sectors.
“Canadian exports and the goods trade deficit began to stabilize in July, albeit at weaker levels than prevailed before U.S. tariffs and related uncertainty took hold,” wrote CIBC senior economist Andrew Grantham in a client note.
After falling by 11.2 per cent in April, exports have increased by 3 per cent since then, leaving export levels still significantly lower than before the trade war.
Energy exports rose by 4.2 per cent in July, following five consecutive monthly declines. Exports of motor vehicles and parts also saw a sizeable bump, rising 6.6 per cent.
The increase in overall exports was partially offset by a decline in unwrought gold exports, which fell by 12.2 per cent.
Meanwhile, Statscan said a decline in machinery imports was the largest contributor to the overall decrease in imports in July.
Imports from the United States also fell, exports rose, widening Canada’s trade surplus with the U.S. to $6.7-billion in July from $3.7-billion in June. This marks the largest trade surplus with the U.S. since March.
Most Canadian goods continue to cross the U.S. border tariff-free, due to a tariff exemption on products that are compliant with the United-States-Mexico-Canada agreement. However, the steel and aluminum sectors continue to face 50 per cent tariffs.
The automotive sector also faces 25-per-cent tariffs on the non-U.S. content in USMCA-compliant vehicles, while vehicles that do not meet the rules of origin under the trade deal face an outright 25-per-cent tariff.
Prime Minister Mark Carney said on Thursday that he’s expecting to reach agreements with the U.S. on some strategic sectors affected by tariffs, though he tempered expectations on when that might happen.
Mr. Carney dropped many of Canada’s retaliatory tariffs against the U.S. recently in hopes of furthering trade talks with U.S. President Donald Trump.