- Canada’s merchandise imports rose by 3.8 per cent (month-on-month) in August. Meanwhile, exports increased by 5.7 per cent. Canada’s merchandise trade balance went from a deficit of $437 million in July to a surplus of $718 million in August.
- Total exports increased by 5.7 percent in August, reaching $64.6 billion. Exports of metal and non-metallic mineral products surged by 29.1 percent, while the value of energy product exports rose by 14.6 percent, primarily driven by prices. Exports of coal, potash, and lumber—products largely exported from British Columbia—rebounded in August following the resumption of port activities. Ultimately, exports increased in seven of eleven product categories, with unwrought gold and crude oil exports contributing significantly to the overall increase in August.
- Total imports increased by 3.8 percent to reach $63.8 billion. Imports of industrial machinery, equipment and parts rose by 7.5 percent, with seven of eight product subcategories posting gains in August. Imports of chemical products also saw an increase, rising by 11.2 percent, following four consecutive monthly declines. Imports of consumer goods and electrical equipment and parts rebounded following the resumption of port activities in British Columbia, partially offsetting the losses recorded in July. Overall, gains were reported in nine of eleven product sections.
- Imports from the United States increased by 0.6 per cent, while exports rose by 5.2 per cent. As a result, the merchandise trade surplus with the United States widened from $8.2 billion in July to $10.4 billion in August.
Many factors could impact Canadian trade in the short-to-medium term. Heightened political tensions between Canada and India have led to a temporary pause of trade negotiations between the two nations. It’s worth noting, however, that India currently represents a relatively small portion of Canada’s trade, accounting for just 0.5 percent of total exports and 0.7 percent of imports. Consequently, any alterations in Canada’s trade relationship with India are unlikely to have a significant impact on international merchandise trade. Conversely, the ending of Ukraine’s grain deal could introduce disruptions in global food production, potentially resulting in prolonged increases in food costs and prices. Additionally, the UAW strike in the United States, affecting certain ‘big three’ automotive plants, has impacted production levels. The full effects of this strike have yet to be realized. Given Canada’s substantial reliance on the U.S. as a trading partner, particularly in the automotive sector, Canadian suppliers engaged with U.S. facilities affected by the strike may experience notable knock-on effects.
A depreciating Canadian dollar and weak economic growth will lead to weaker import growth. Currently valued at approximately $0.73 USD, the Canadian dollar has been on a declining trajectory since spring 2021, which has provided some relief to exporters. However, a cooling global economy is expected to exert downward pressure on exports in the short run. On the domestic front, elevated interest rates have hindered household spending growth, and this trend is anticipated to persist for several months. The combination of lackluster economic growth and a depreciating Canadian dollar will likely hinder import growth in the near term. Furthermore, the strikes at British Columbian marine ports have adversely affected both imports and exports in July.
For an overview of our three-year international trade outlook, click here.