Canada experienced a shift to a trade surplus in March as exports surged due to higher crude oil prices and increased demand for gold, while imports decreased, according to recent data. Statistics Canada reported a surplus of $1.78 billion for the month, a significant improvement from the $5.11 billion deficit in the previous month. This marked the first surplus in six months, driven by the rise in crude oil prices amid the conflict in Iran, boosting export values. Although gold prices decreased in March, strong global demand for the precious metal contributed to further export growth.
Analysts had anticipated a deficit of $2.88 billion, but total exports soared by 8.5% to $72.8 billion. The notable increases were seen in metal and non-metallic products, which reached a record high with a 24% surge, and energy exports, hitting their highest level since September 2022 with a 15.6% increase. Excluding these categories, overall export values rose modestly by 1.1% but declined by 0.3% in volume terms. Following a substantial increase in February, motor vehicle and parts exports rose by 4.5% in March.
Canada’s exports to the U.S. rose by 8.3% to $48.51 billion in March, led by higher crude oil prices and increased shipments of passenger cars and light trucks. However, imports from the U.S. decreased by 1.2% to $41.44 billion. This resulted in a trade surplus of $7.1 billion with the U.S., the highest in six months, while the share of exports to the U.S. dropped to a historic low of 66.7%. This decline is attributed to the ongoing trade tensions with the U.S., including tariffs imposed by President Donald Trump to reduce the trade deficit.
Meanwhile, exports to countries other than the U.S. reached a new peak in March, increasing by 9.1%, while imports from non-U.S. countries declined by 2.2%. The Canadian dollar saw a slight increase of 0.03% to 1.3620 following the release of the trade data. Market expectations suggest that the Bank of Canada may implement two 25 basis point rate cuts by the end of the year.