Trade Balance Swings to Deficit

  • Canada’s merchandise exports were down 5.3 per cent (month-over-month) in March, erasing February’s revised gains. Imports also fell, but by only 1.2 per cent, opening a net trade deficit of $2.3 billion, the largest negative balance since June 2023. February’s merchandise balance had been a $476 million surplus.
  • Exports totaled $62.6 billion in March. The decline was broadly based, falling in 9 of 11 major categories. Exports of metal and non-metallic mineral products accounted for roughly half of the total change, dropping 17.4 per cent from the previous month. High-value shipments of unwrought gold to the United Kingdom and Switzerland in February did not continue into March. Unplanned shutdowns of refineries in the United States led to a 6.6 per cent drop in crude oil exports, while auto factory retooling brought cross-border shipments of cars and light trucks down to their lowest levels in a little over a year. Exports of farm, fishing and food products were also down almost 10 per cent in March, erasing strong gains made in February.
  • Imports fell to $64.8 billion in March, but it was still the second-highest reading since September last year. Canada imported more metal and non-metallic minerals (+10.8 per cent) along with gains in industrial chemical, plastic and rubber products (+6.1 per cent). The largest monthly declines were in electrical and electronic equipment (–8.1 per cent), metal ores and minerals (–29.2 per cent), along with aircraft and other transportation products (–19.8).
  • In volume terms, exports were flat in the first quarter of 2024, while imports showed a small gain of 0.6 per cent.
  • Canada’s exports to the United States fell 5.0 per cent, while imports declined 1.1 per cent, narrowing the trade surplus from $8.5 billion in February to $6.5 billion in March. The trade balance with all other countries combined into a $8.8 billion deficit, up from $8.0 billion in February.


Weaker domestic demand will dampen the outlook for imports. Higher rates will continue to exert pressure on both consumers and businesses until the Bank of Canada starts to lower rates. Our recent consumer and business confidence surveys have finally started to improve, but the indices still fall short of optimistic levels. Weak domestic demand and subdued business investments are expected to persist, which will hinder import growth this year.

Export growth has underperformed since mid-2022 and weakness is expected to persist. The U.S. economy is expected to cool over the next several months which will weigh on Canadian exporters. We are anticipating that the underlying weakness in exports this year will come from non-energy exports, as energy exports are expected to post reasonable gains. However, we do expect that exports will outpace imports this year, which will lead to a widening trade balance. And there are risks present, such as weaker global economic activity and ongoing geopolitical tensions, that could dampen the outlook on Canadian trade.