Canada’s goods trade deficit increased substantially to C$5.9 billion ($4.24 billion) in June, as imports outpaced exports, owing to a one-time, high-value import of oil equipment from the United States.
Statistics Canada revealed the figures on Tuesday, revealing the second-largest monthly trade imbalance on record. Only April 2025 witnessed a greater imbalance, with the deficit reaching a record C$7.6 billion.
Analysts predicted the June deficit to be C$6.3 billion, up from C$5.5 billion in May, which had been revised downwards.
Even though global energy tensions briefly boosted Canadian exports, the figures nevertheless show a worsening trade situation.
Imports rebound after three-month slump
June saw total imports increase 1.4% to C$67.6 billion, following a 1.6% drop the previous month. Nevertheless, without the one-off oil module import, imports decreased 1.9%.
Industrial imports jump on the back of a module, imported by the US for an offshore oil project, with a 10% rise in overall imports, which gained on the back of 3 months of decline.
Imports from the US, in particular,r rose 2.6%, reflecting the same oil-related purchase.
Removing this distortion, however, the overall trend in import numbers indicates either waning demand in the home economy or a change in the supply chain arrangements.
Exports rise in value but fall in volume
Canada’s exports increased by 0.9% to C$61.74 billion, the second consecutive monthly increase following a 2% gain in May.
The surge was mostly due to an increase in crude oil export values, as Middle Eastern tensions pushed global oil prices higher in June.
However, export volume fell by 0.4%, showing that the gain in export values was solely due to price increases rather than increasing shipment levels.
The underlying decline in export volumes calls into question the sustainability of recent favourable improvements.
Trade with the US remains under pressure
Despite high monthly export results to the United States (up 3.1% in June due to crude oil exports), trade ties remain strained.
Year on year, exports to the United States fell 12.5%, indicating the broader impact of higher tariffs.
Also adding pressure, in August, US President Donald Trump pledged to go from a 25% tariff on the offending Canadian goods that breached the free trade agreement to 35%.
Reflecting their political and economic importance, Canadian sectors from steel and aluminium to cars have been hit by selective American tariffs that have prompted exporters to shift their focus to Europe, the Middle East, and the Indo-Pacific.
However, exports outside the US dropped 4.1% in June, the first month-over-month drop since February, following a record high in May.
This means that different markets have yet to replace what has been lost with Canada’s largest trading partner.
Market reaction muted but cautious
The Canadian dollar fell 0.2% to 1.3804 against the US dollar, or 72.44 cents.
Meanwhile, two-year Canadian government bond yields jumped by 0.6 basis points to 2.703%.
The mix of tariff headwinds, changing trade dynamics, and the impact of one-time imports complicates the overall trade picture.
While headline numbers suggest a growing deficit, underlying data reveal deeper structural issues that may continue to play out in the coming months.
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