The Conference Board of Canada’s Economist Daniel Fields offers the following insights on the latest Merchandise Trade release from Statistics Canada:
“Canada’s merchandise trade numbers for June were generally positive, despite the Trump administration’s June 1 announcement of new tariffs on steel and aluminum imports. Solid export numbers were supported by increased trade with non-U.S. trading partners.”
—Daniel Fields, Economist, The Conference Board of Canada.
- The second quarter of 2018 ended with a solid performance, as June saw exports rise by 4.1 per cent while imports fell 0.2 per cent.
- As a result, the trade deficit fell from $2.7 billion in May to $626 million, bringing the trade balance to its smallest deficit since January 2017.
- Interestingly, while energy was the biggest contributor to the solid increase in exports (increasing 7.1 per cent), non-energy exports also performed well increasing 3.4 per cent. This is welcome news as we saw a relatively poor performance outside of the energy sector in the first half of the year.
- After soaring in recent months as companies sought to avoid incoming tariffs, exports of steel and aluminum fell in June. Steel exports, which are now subject to a 25 per cent tariff, declined substantially by 36.8 per cent in the month and are now 14.3 per cent below the same period last year. While exports of aluminum - which are subject to a 10 per cent tariff - declined 7 per cent in June, they are still 10.2 per cent higher than the same period last year.
- As the contentious NAFTA negotiations continue, Canada is looking to non-U.S. trading partners to diversify growth. While trade with countries outside of America still make up only 27 per cent of Canada’s export profile, growth with non-U.S. countries nearly doubled export growth to the U.S. in the last 12 months.
- In June exports to the U.S. increased by 2.5 per cent compared to an increase in exports to non-U.S. countries of 8.7 per cent.
- Adjusting for the effect of prices, export volumes increased by 2 per cent in June based on strong growth in industrial machinery, metal ores, and aircraft.