Canada’s trade surplus sharply narrowed in July as exports of energy and metal products shrank while imports rose, data showed on Thursday, just weeks before a major escalation in trade dispute with its biggest trading partner the United States. The trade surplus was C$769 million (US$557 million), compared with a four-year high surplus of C$4.2 billion posted a month ago, Statistics Canada said. Economists polled by Reuters had forecast a surplus of C$3.57 billion in July. Exports dropped 2.3 per cent, while imports increased 2.2 per cent. The July figures, which is Canada’s fifth consecutive monthly trade surplus, extended a run of relatively resilient Canadian trade despite more than a year and a half of U.S. tariffs. However, Washington’s 50 per cent new tariffs imposed by last month will provide a tougher test for exporters in the coming months. The decrease in exports in July was primarily led by energy products, which accounts for almost a quarter of Canada’s total exports, and 95 per cent of which usually flows south of the border. Its value dropped 4.4 per cent in July, a third consecutive monthly decline after exports of crude oil decreased by 5.5 per cent, with both prices and volumes falling, StatsCan said. Exports of metal and non-metallic mineral products, which posted an increase of 15.8 per cent in the prior month, also shrank by 8.5 per cent in July. As a result, Canada’s total exports fell to C$76.14 billion, down from C$77.96 billion in June, but excluding metals and energy, exports increased 0.6 per cent in July. The overall decrease in total exports in July was partially offset by higher exports of aircraft and other transportation equipment and parts, which surged by 34.9 per cent. Imports rose in July to a value of C$75.37 billion, up from C$73.76 billion, StatsCan said, adding that it was the sixth consecutive monthly increase. This was led by an 11.4 per cent increase in imports in motor vehicle and parts, mainly from the U.S. Exports to the U.S. dropped 6.6 per cent in July while imports from the country increased by 1.8 per cent, shrinking Canada’s trade surplus with its main trading partner by more than 40 per cent to C$5.9 billion. U.S. accounted for 66.35 per cent of Canada’s total exports in July, underscoring a gradual decline in Canada’s reliance on the U.S. market. The July figure was down from 69.39 per cent in June and 72.64 per cent a year ago. However, Canada’s import dependence on U.S. has narrowed to only 59 per cent in the last 12 months as compared with 62 per cent in 2024. Exports to countries other than the United States rose 7.4 per cent, while imports increased 2.8 per cent, leaving Canada with a non-U.S. trade deficit of C$5.1 billion, down from C$6.1 billion in the prior month. (Reporting by Promit Mukherjee; Editing by Dale Smith)
