Exports rise, imports fall: Canada’s trade deficit shrinks to $4.9 billion

Investing.com -- Canada’s merchandise trade deficit narrowed in July, as exports gained and imports declined amid a rebound in energy and auto shipments. According to data from Statistics Canada, exports rose 0.9% to $61.9 billion during the month, the third consecutive increase, while imports dipped 0.7%, helping shrink the trade gap to $4.9 billion from $6.0 billion in June.

The improved external trade position for July was underpinned by strength in energy products and motor vehicles, offsetting declines in metals and minerals. In real terms, exports rose 1.6%, suggesting stronger economic momentum than nominal data alone would indicate.

Energy exports surged 4.2%, halting a five-month slide, driven by gains in crude oil, nuclear fuel and coal. Crude oil exports alone advanced 2.3%, benefiting from an upswing in both prices and volumes. Meanwhile, motor vehicle and parts exports jumped 6.6% in July, as summer production stoppages were less impactful than normal due to earlier disruptions from tariffs.

On the import side, total shipments fell as a result of a drop in industrial machinery and equipment, which slipped 18.8%. The decline followed an exceptional one-time import of offshore oil project equipment in June, skewing month-to-month comparisons. Excluding this category, imports actually rose 2.2%, supported by strength in aircraft, vehicles, and consumer goods.

Exports to the U.S., Canada’s primary trading partner, rose 5.0%, while imports declined 2.2%, further widening the trade surplus with the U.S. to $6.7 billion, the widest since March 2025. In contrast, trade with non-U.S. partners deteriorated, as exports slumped 8.6% and imports rose 1.3%, pushing the deficit with those nations to $11.7 billion.

Trade in services offered some relief to the overall balance, with service exports rising 2.6% to $18.7 billion, while imports declined 1.3% to $18.2 billion. When combined with goods, total exports reached $80.6 billion, and total imports stood at $85.0 billion, reducing Canada’s total trade deficit to $4.4 billion.

Revisions to June data also influenced the monthly comparisons, with June exports revised down to $61.3 billion from $61.7 billion, and imports revised to $67.3 billion from the previously reported $67.6 billion. These revisions amplify July’s relative improvements and reflect continued challenges in reconciling trade data following the implementation of the CARM digital initiative.

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