Canada Sees GDP Shrink In Q2 After 7.5% Drop In Exports

Canada’s economy shrank in the second quarter of 2025, with real gross domestic product falling 0.4 percent following a 0.5 percent gain in the previous quarter. The contraction was primarily triggered by steep declines in exports and reduced business investment in machinery and equipment, even as robust household spending, rapid inventory accumulation, and lower imports cushioned the downturn.

Exports of goods fell sharply by 7.5 percent, a reversal from the 1.4 percent increase in the first quarter, weighed down by United States-imposed tariffs. International exports of passenger cars and light trucks plunged 24.7 percent, while industrial machinery, equipment, and parts dropped 18.5 percent. Travel services exports also saw an 11.1 percent decline, reflecting disruptions in cross-border commerce.

Counter-tariffs levied by the Canadian government dampened imports, which contracted 1.3 percent. Notably, imports of passenger vehicles decreased 9.2 percent, but purchases of intermediate metal products—especially unwrought gold, silver, and platinum group metals—expanded by 35.8 percent, signalling increased demand for precious metals.

FLASHBACK: Canada’s GDP Losses From Tariffs Could Reach 5%: Analyst

Businesses absorbed much of the tariff-driven cost pressure by lowering prices, with export prices down 3.3 percent and import prices down 2.3 percent, causing the terms of trade to slip by 1.1 percent. Overall business investment dipped 0.6 percent, with a striking 9.4 percent drop in machinery and equipment outlays, the weakest pace seen outside the pandemic’s first year since 2016.

Household spending climbed 1.1 percent, led by purchases of new vehicles, insurance, food, and dining out, though spending on electricity and alcoholic beverages declined. Residential construction rebounded, up 1.5 percent, driven by a surge in new apartment projects in British Columbia. Ownership transfer costs increased modestly, while home renovations contracted.

Business inventories grew markedly, reflecting manufacturing and wholesale stockpiling and greater investor acquisitions of precious metals. While retail inventories edged up, withdrawals of motor vehicles amid shrinking imports slowed overall retail stock accumulation.


Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Silver’s Finally Breaking the System | Keith Neumeyer – First Majestic

The Best News for Gold Was the Drop! – Peter Grandich

McEwen Copper: The Los Azules Feasibility Study

Recommended

Steadright To Conduct Multi-Phased Exploration At Historic Goundafa Polymetallic Mine

Goliath Resources Drills 10.72 g/t Gold Over 7.83 Metres At Surebet

Related News

Canada’s Economy Stalls as Supply Constraints Weigh on Growth

Canada’s economy fared worse than expected in August and remained little changed in September, as...

Friday, October 29, 2021, 03:33:00 PM

Global Debt Expected to Surpass $300 TRILLION and GDP Growth Slows

Thanks to the all-encompassing “Helicopter Money” that is Modern Monetary Theory, global debt has soared...

Sunday, September 19, 2021, 11:15:00 AM

Canada’s Economy Expanded by 0.1% in December Amid Tightened Covid-19 Restrictions

The Canadian economy continues to slowly expand, following a pandemic-ravaged year that plunged GDP levels...

Tuesday, March 2, 2021, 04:07:00 PM

Interest Rate Aftermath: Canada’s Economy Unexpectedly Contracts in Second Quarter

Canada’s real GDP in the second quarter remained largely stagnant, showcasing the tangible impact of...

Sunday, September 3, 2023, 01:49:00 PM

Canada’s Economy Expanded By 0.7% In January

Canada’s recovery appears to be showing continued resiliency, despite a second wave of pandemic-related closures...

Thursday, April 1, 2021, 02:39:00 PM