Merchandise Trade

EXPORTS TUMBLE 5.3%

Canada’s merchandise exports plunged 5.3% to $62.6 billion in March, the fourth decline in five months. Meanwhile, merchandise imports decreased 1.2% to $64.8 billion, down for the second time three months. In real (or volume terms), exports and imports were down 5.1% and 1.1%, respectively.

Unfortunately, the data for the first three months of the year indicate that net trade will be a drag on first quarter GDP growth, as real imports grew by 2.4% on an annualized basis and real exports were roughly flat.

TRADE BALANCE SWINGS TO A DEFICIT

Canada’s trade balance deteriorated from a surplus of $476 million in February to a deficit of $2.3 billion in March, the largest deficit since June 2023. Digging into the details, the country’s trade surplus with the U.S. narrowed from $8.5 billion in February to $6.5 billion in March, while our trade deficit with the rest of the world widened from $8.0 billion to $8.8 billion.

GOLD EXPORTS SEE STEEP DROP

The decrease in exports was widespread, spanning 9 of 11 product sections. After reaching an all-time high in February, exports of metal and non-metallic mineral products tumbled 17.4% to $7.8 billion in March. The decline was driven by a steep drop in exports of unwrought gold, which also fell from a record level.

Exports of energy products decreased 4.9% to $14.1 billion in March, mainly on lower exports of crude oil and bitumen. This was the fifth decrease in six months for crude oil exports, with the latest decline coinciding with unplanned shutdowns at refineries in the U.S. Midwest, a key destination for Canadian crude oil.

Following an increase of 3.7% in February, exports of motor vehicles and parts fell 6.3% to $8.0 billion in March. Notably, exports of passenger cars and light trucks fell to their lowest level since December 2022. Statistics Canada reported that the recent decline in auto exports is due to several assembly plants being retooled in preparation for the launch of new vehicle models.

Following a 10.3% gain in February, exports of farm, fishing and intermediate food products fell 9.2% to $4.6 billion in March. The decline was led by exports of other crop products, wheat and fresh fruit, nuts and vegetables, and pulse crops.

In March, the aerospace industry stood out as a rare positive, with exports of aircraft and other transportation equipment and parts climbing 15.7% to $2.5 billion. However, it is worth noting that this was only the second increase in the past five months.

EXPORTS TO ALL MAJOR TRADING PARTERS DECLINED

Exports to the U.S. decreased 5.0% to $47.2 billion in March, the biggest one-month drop since April 2020. At the same time, exports to the rest of the world fell 6.5% to $15.3 billion. Exports to all of Canada’s major non-U.S. trading partners declined in the month, largely attributable to lower exports of unwrought gold to Switzerland, nuclear fuel to France, and unwrought gold and crude oil to the U.K.