Canada Trade Surplus Widens Sharply Ahead of Fresh Tariffs — Update

By Robb M. Stewart

OTTAWA--Canada's goods-trade surplus with the world ballooned to the largest in more than four years as likely tariff front-running drove a jump in exports to the U.S.

The merchandise-trade surplus recorded by Canada widened to 4.2 billion Canadian dollars, the equivalent of about US$2.94 billion, Statistics Canada said Tuesday.

It marked a sixth consecutive trade surplus and the biggest since May 2022, after the balance narrowed to C$787 million in July. Economists were expecting a C$1.5 billion surplus for the month.

Exports rose 2.5% to C$77.91 billion, the highest since June's record, driven by an 8.1% jump in shipments to the U.S. Goods imports fell 2%, the first drop in seven months.

Canada's long-standing surplus with its neighbor saw the biggest positive shift ever, widening to C$11.22 billion. That was the largest surplus since the start of 2025, when companies raced to build stockpiles of goods ahead of the Trump administration's first wave of tariffs.

The U.S. in July unveiled plans for new 50% tariffs on the equivalent of about 5% of Canadian exported goods, levies that took effect in late August and may have again influenced American importers to build stocks to avoid additional costs. Ottawa at the end of August also announced counter-tariffs on select U.S. goods.

The proportion of Canadian exports that headed to the U.S. climbed to 69.8% in August, the most since September 2025, after falling to 66% in July.

Canadian shipments to countries other than the U.S. dropped by 8.5% between July and August and imports from non-U.S. countries fell 1.4%. That widened Canada's merchandise-trade deficit with non-U.S. countries to C$7.02 billion from C$5.27 billion the month before.

The rebound in exports overall after a drop in July was broad across eight of the 11 product categories tracked by Statistics Canada. In volume terms, exports were up 2.5% for the month.

Shipments of energy products increased for the first time since April, rising 4.7% thanks to a strong rise in refined petroleum products driven by exports to Peru, the U.K., U.S. and Netherlands. Excluding energy, Canadian exports were up a more modest 1.8% in August.

Exports of Canadian consumer goods also were up strongly, as were shipments of industrial machinery, equipment and parts thanks to a big increase in general-purpose machinery sent to the U.S.

The fall in imports into Canada was led by a fall in motor vehicles and parts. Stripping out autos, imports were down 0.5%. In volume terms, imports overall were 1.1% lower.

Trade flows were a big driver of the rebound in Canadian activity in the second quarter, though pressures have again built up that threaten to mute economic growth as fuel prices remain elevated and with a souring of trade relations between Canada and the U.S.

When international trade in goods and international trade in services were combined, Canadian exports rose 2.1% from a month prior, while imports fell 1.7%. As a result, Canada's trade surplus incorporating both goods and services widened to C$4.63 billion in August from C$988 million in July.

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

(END) Dow Jones Newswires

October 06, 2026 08:59 ET (12:59 GMT)