Canada’s merchandise trade balance tallied a first-in-ten-month surplus of $708 million in December. November’s deficit was revised higher to $986 million (from $323 million reported earlier).
Merchandise exports accelerated to 4.9% month-on-month (m/m) from 1.9% in November, with gains reported by 8 out of 11 sectors. Energy exports, driven by higher crude oil prices, were once again the biggest driver of exports, accelerating to 9.5% m/m. Exports of metal and non-metallic mineral products (+9.2% m/m) and motor vehicles and parts (+3.9% m/m) also added admirably to the headline tally.
Merchandise imports also moved higher for a third straight month, up by 2.3% m/m in December. The biggest gains came from consumer goods (+4.7% m/m), metal and non-metallic mineral products (+8.7%) and industrial machinery (+5.0% m/m).
In volume terms, merchandise exports rose by 2.6% m/m while imports edged higher by 0.2% m/m.
Canada’s merchandise trade surplus with the United States widened to $11.3 billion in December from $8.2 billion the month prior.
Key Implications
Trade finished the quarter on a strong note, with goods likely providing an improved trajectory for Q4 GDP growth. Trade-related uncertainty has likely led companies to stockpile inventories, temporarily boosting trade. Note, Statistics Canada’s ongoing transition in trade-related data means these figures should be interpreted with caution.
While the immediate threat of tariffs on Canadian exports has been delayed until next month, the outlook remains uncertain as tariffs are still on the table. Any future tariffs will have negative consequences for economic growth, though the ultimate effect will depend on depth, breadth, duration and retaliation.
