Canada’s merchandise trade balance swung to a deficit of $2.28 billion in March, the largest trade deficit since June 2023. This unexpected shift came as exports declined 5.3% while imports fell by a more modest 1.2%.
The main driver behind the widening trade deficit was a decrease in exports of unwrought gold, which had previously reached a record high in February. Excluding gold, exports were still down 3.2% in March. Exports to the United States, Canada’s largest trading partner, fell 5.0%.
On the import side, declines were seen in several sectors including electronics, metals, minerals, and aircraft. Canada’s trade deficit with countries other than the U.S. also widened, from $8.0 billion in February to $8.8 billion in March.
The trade data adds to growing evidence of an economic slowdown in Canada, as the country grapples with the impact of the Bank of Canada’s aggressive interest rate hikes. Policymakers are now considering when to start cutting rates as they look for signs that inflation is returning to the 2% target.
Overall, Canada’s total trade deficit with the world widened from $431 million in February to $3.3 billion in March when both goods and services trade are included. This represents a significant deterioration in the country’s trade position and underscores the challenges facing the Canadian economy in the current environment.
Information for this briefing was found via StatsCan and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
