Canada’s Trade Surplus Shrinks to C$769 Million as U.S.-Bound Exports Fall

Canada’s merchandise trade surplus narrowed to C$769 million in July as exports fell for the first time in six months and imports continued to rise. The surplus was down sharply from a revised C$4.2 billion in June, though July still marked the fifth consecutive month in which Canada exported more goods than it imported.

Total exports declined 2.3% to C$76.1 billion, while imports increased 2.2% to C$75.4 billion, according to Statistics Canada’s July merchandise trade report released Thursday. The change was driven in large part by weaker shipments to the United States, where Canadian exports dropped 6.6%. Imports from the United States rose 1.8% at the same time, reducing Canada’s bilateral goods surplus with its largest trading partner.

U.S. trade surplus falls as crude oil and gold exports weaken

Exports to the United States posted their steepest percentage decline since April 2025. Statistics Canada said lower crude oil and gold exports were behind much of the July decrease. Canada’s goods surplus with the United States fell to C$5.9 billion from C$10.3 billion in June, its lowest level since February 2026.

The U.S. decline came against a very different pattern elsewhere. Exports to countries other than the United States rose 7.4% for a third straight monthly increase and reached a record C$25.6 billion. Higher shipments to the Netherlands, China and Germany contributed most to that gain. Non-U.S. destinations accounted for 33.7% of Canadian merchandise exports in July, giving the monthly report an unusually clear split between weaker U.S.-bound trade and stronger sales to other markets.

Canada’s deficit with countries other than the United States also narrowed, falling to C$5.1 billion from C$6.1 billion in June. Statistics Canada said that was the smallest non-U.S. trade deficit since January 2021. Imports from countries other than the United States increased 2.8%, with higher purchases from China partly offset by lower imports from Germany.

The widening geographic gap helps explain why the overall surplus remained positive despite the large contraction in exports to the United States. Record exports to non-U.S. destinations absorbed part of the decline, but not enough to prevent the global goods surplus from shrinking by more than C$3 billion from June.

Metals and energy lead the decline in Canadian exports

Seven of the 11 major export product sections fell in July. Metal and non-metallic mineral products and energy products made the largest contributions to the monthly decline. Excluding those two sections, total exports would have risen 0.6%. In inflation-adjusted terms, merchandise exports were down 1.5%, showing that the weakness was not limited to price changes.

Exports of metal and non-metallic mineral products fell 8.5% after a 15.8% increase in June. Within that group, exports of unwrought gold, silver, platinum-group metals and their alloys declined 13.1%. Statistics Canada attributed the drop mainly to lower purchases of Canadian-held gold by foreign residents and fewer shipments to the United States, with lower prices also weighing on export values. Export prices for that precious-metals category were 9.0% below their February 2026 peak.

Energy exports decreased 4.4%, extending their decline to a third consecutive month. Crude oil exports fell 5.6% as both prices and volumes moved lower, while natural gas exports dropped 14.0% after two monthly increases. Statistics Canada cautioned that crude oil figures for the current reference month are estimated and can be subject to larger revisions during periods of elevated price volatility.

Several categories moved in the opposite direction. Exports of aircraft and other transportation equipment and parts jumped 34.9%, with aircraft exports themselves rising 80.1% as a number of commercial aircraft and business jets were shipped to overseas destinations. Farm, fishing and intermediate food-product exports increased 5.5% to their highest level since March 2023. Canola exports rose 43.2%, helped by greater shipments to China, Pakistan and Japan, and were 32.2% higher over the first seven months of 2026 than in the same period a year earlier.

Imports rise for a sixth month as vehicle shipments reach a record

July extended the run of higher imports to six consecutive months. Motor vehicles and parts were a major contributor, climbing 11.4% to a record level. Passenger cars and light trucks increased 19.8% on a seasonally adjusted basis. Statistics Canada said seasonal shutdowns at North American auto plants were less pronounced this July, particularly in the United States, contributing to the unusually strong flow of vehicle imports.

Imports of metal and non-metallic mineral products rose 9.3%. Basic and semi-finished non-ferrous metal products increased sharply on higher shipments of copper anodes from Chile, while imports of unwrought gold, silver, platinum-group metals and their alloys rose 14.6%. Statistics Canada said higher purchases of gold in Canada held by U.S. residents contributed to that increase.

Not every import category strengthened. Energy-product imports declined 8.2%, electronic and electrical equipment and parts fell 3.3%, and imports of aircraft and other transportation equipment and parts dropped 8.1%. Even with those declines, the broader increase in imports helped compress the trade surplus because the rise came at the same time that total exports were retreating.

The agency also revised June’s trade figures. June imports were raised to C$73.8 billion from the C$73.6 billion initially reported, while exports were revised up to C$78.0 billion from C$77.5 billion. Those revisions set the comparison point for July’s C$4.2 billion-to-C$769 million narrowing in the goods surplus.

Canada’s services trade provided a small offset to the weaker merchandise picture. Statistics Canada separately reported that services exports rose 1.2% to C$21.0 billion in July, while services imports fell 1.1% to C$20.7 billion, producing a C$0.3 billion services surplus. Combining goods and services, Canada recorded an overall trade surplus of C$1.1 billion for the month.

The next monthly merchandise trade release, covering August, is scheduled for October 6. That report will show whether July’s drop in U.S.-bound exports was a one-month reversal or whether the recent strength in non-U.S. markets is becoming more important to Canada’s overall trade balance.