Canada’s trade balance shifted to a surplus in March driven by higher crude oil prices and increased demand for gold, leading to a notable rise in exports while imports decreased, according to recent data. Statistics Canada reported a surplus of $1.78 billion for March, a significant turnaround from the $5.11 billion deficit recorded in the previous month. This marked the first surplus in six months, attributed to the rise in crude oil prices due to conflicts in Iran, boosting export values from Canada. Despite a drop in gold prices, the global demand for the precious metal contributed to further export growth.
Analysts had predicted a deficit of $2.88 billion, but total exports surged by 8.5% to $72.8 billion, with notable increases in metal and non-metallic products by 24% to a record high and energy exports by 15.6% reaching their highest level since September 2022. Excluding these categories, Canada’s exports saw a modest 1.1% increase in value terms and a slight 0.3% decline in volume terms. Additionally, following a significant increase in February, exports of motor vehicles and parts rose by 4.5% in March.
The share of exports to the U.S. decreased, with higher crude oil prices and enhanced shipments of passenger cars and light trucks propelling Canada’s exports to the U.S. up by 8.3% to $48.51 billion, the highest level in a year. Conversely, imports from the U.S. fell by 1.2% to $41.44 billion. The trade surplus with the U.S. reached $7.1 billion, the highest in six months, while the share of exports to the U.S. dropped to a record low of 66.7%. This decline comes amidst the ongoing trade tensions with the U.S., with President Donald Trump imposing tariffs on Canadian goods to reduce the trade deficit.
In contrast, Canada’s exports to countries other than the U.S. hit a new peak in March, with a 9.1% increase, while imports from non-U.S. countries dropped by 2.2% in the same period. Following the trade data release, the Canadian dollar experienced a slight increase to 1.3620. Market expectations suggest that the Bank of Canada may implement two 25 basis point rate cuts by the end of the year.