Canada Goods-Trade Surplus Widens Slightly With Record Exports, Imports — 2nd Update

By Robb M. Stewart

OTTAWA--Canada's trade surplus with the world hit a four-year high as exports rose for a fifth straight month to reach a fresh peak, buoyed by a surge in gold shipments that helped counter a pullback in oil prices and all-time high imports.

Canada recorded a merchandise-trade surplus of 3.86 billion Canadian dollars, the equivalent of about US$2.74 billion, Statistics Canada said Tuesday. That was larger than the positive C$3 billion trade balance that economists had anticipated and came after May's surplus was revised downward to C$3.7 billion.

Exports of Canadian goods increased 0.4% to C$77.79 billion in the latest month, while imports nudged up 0.2% to C$73.63 billion, the national data agency said.

Canada has now run a goods-trade surplus for four months running, and the data point to a strong contribution from net trade to the estimated rebound in gross domestic growth for the second quarter. It adds to evidence that businesses are adapting to U.S. trade policies, though uncertainty remains high after President Trump recently threatened a new round of tariffs on U.S. imports from its northern neighbor.

Shipments to the U.S. rose a fifth consecutive months with an advance of 0.3% in June, and imports climbed 3% to the highest on record, evidence of the still strong reliance Canada has on the U.S. Canada's longstanding surplus with its biggest trading partner narrowed to C$9.98 billion from C$11.12 billion a month earlier.

Exports to countries other than the U.S. increased 0.7% in the latest month, but imports fell 3.7% after reaching the highest in record in May, narrowing Canada's merchandise-trade deficit with non-U.S. countries to C$6.13 billion from C$7.42 billion a month prior. Prime Minister Mark Carney is targeting a doubling of non-U.S. exports over the next decade in an effort to pivot the country toward new markets and to strengthen its resilience.

Total exports over the second quarter jumped 13.1%, the strongest increase since the third quarter of 2020. Almost half of the rise was due to increased energy exports, as well as a lift in shipments of motor vehicles and parts. Imports for the quarter were up 4.2%. In volume terms, exports were up 5.4% for the quarter and imports notched a more modest 1.4% rise.

Canada's economy has recovered strongly after two weak quarters, and is tracking estimated annualized growth of 3.4% for the second quarter, which would be the fastest pace since the first three months of 2023.

"June's data confirm that a further rebound in export volumes from the lows seen in 2025 appears to have been a large driver of the strength in GDP signaled for the second quarter," said Andrew Grantham, senior economist at CIBC Capital Markets. "Export volumes could see a small bump in the next couple of months if companies potentially impacted by new U.S. tariffs look to front-run their implementation, but there would be a negative effect afterwards if these new tariffs actually come into effect."

While most Canadian exports to the U.S. maintain a duty-free exemption under the North American trade pact, Trump has threatened stiff 50% levies on a range of items that would add to sector-specific tariffs on goods including steel and autos.

The value of Canadian trade in the latest month was inflated by weakness in the Canadian dollar, which depreciated 1.7% against the U.S. dollar in June in what was the sharpest retreat since October 2022. In U.S. dollar terms, exports declined 2% and imports were down 2.1% between May and June.

June's rise in exports was buoyed by a nearly 28% increase in unwrought precious metals with a rise in gold shipments to the U.K. and higher purchases of Canadian-held gold by foreign residents. Exports of copper ores and concentrates also rose strongly to reach a record high record, with shipments to Japan, China, Finland and South Korea.

Exports of motor vehicles and parts were up for a fifth consecutive month with an increase in auto production in Canada.

Still, exports of energy products fell 10%, mainly due to a drop in crude oil with a retreat in prices during the month before as fighting in the Middle East escalated once again.

The modest rise in June imports was led by computers and computer peripherals, without which inbound shipments would have fallen 1.3% for the month.

"With all of the monthly data for the second quarter now in, the trade balance's flip into a sizeable surplus implies net trade made a healthy contribution to overall GDP growth," said Bradley Saunders, North America economist at Capital Economics. "This still does not change our forecast for the Bank of Canada to leave rate hikes until 2027, however, given that this strength follows two quarters of weakness and is in large part attributable to a temporary boost to the oil and gas sector."

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 04, 2026 11:27 ET (15:27 GMT)