Canada’s February trade data delivered a much larger deficit than expected, as a record import surge led by gold and autos overwhelmed stronger exports and sharply narrowed the country’s trade cushion with the US.
Statistics Canada reported a February goods trade deficit of C$5.7 billion, or about $4.1 billion, the largest shortfall since August and among the deepest on record. One estimate put the consensus estimate at C$2.25 billion, while a Bloomberg survey forecast of C$2.5 billion.
The scale of the move was driven by an unusually strong rise in both sides of the ledger, with imports growing faster. Total imports jumped 8.4% to a record C$72.1 billion, while exports rose 6.4% to C$66.31 billion. In volume terms, imports climbed 7.1% and exports increased 4.8%, indicating the deterioration was not just a price effect.
January was also weaker than previously thought. Revised data now shows a January trade deficit of C$4.2 billion, larger than earlier reported.
The main driver was precious metals. Imports of metal and non-metallic mineral products surged 45.6% in February, driven by higher gold purchases from the US. Imports of waste and scrap metal rose 108%, more than doubling on higher imports of gold scrap from the US. Excluding precious metals, the trade deficit would have been C$10.3 billion.
Overall imports from the US rose 13.6%, reaching the highest level since March 2025, when tariffs first came into effect. The increase was driven mainly by gold and automotive imports. Exports to the US rose only 4.4%, supported by higher shipments of passenger cars and light trucks.
Autos provided one of the few major offsets. After January work stoppages held back production, exports of motor vehicles and parts rebounded 24.2% in February. Even with that recovery, it was not enough to keep the bilateral balance from weakening sharply. Canada’s trade surplus with the US narrowed to C$1.7 billion from C$4.9 billion in January, the smallest surplus since May 2020.
Exports to countries other than the US rose 10.5%, while imports from those countries increased 1.6%. That helped narrow Canada’s trade deficit with non-US countries to C$7.5 billion from C$9.1 billion in January, even as trade with those countries reached a record high in February.
Net trade is likely to weigh on Q1 GDP because of the import surge, though some argue that the jump may also reflect restocking after an inventory drawdown that had been a major drag on GDP in the previous quarter.
For markets, the report lands in a tougher policy backdrop. The Bank of Canada held its benchmark rate at 2.25% and said it would rely on judgment more than usual as the Iran war, US trade policy, and incoming data make the outlook harder to model.
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