- Canada’s goods exports fell 2.8% in November and imports ticked down 0.1%—resulting in a deficit of $2.2 bn for the month. While unwrought gold was the main driver in changes on the export side (as it has been for several months), motor vehicles and parts also contributed to the decline in November—coinciding with the new U.S. tariffs on heavy trucks and buses. On the import side, declines in motor vehicles and energy imports were offset by increases in consumer goods.
- Looking at the first eleven months of the year as a whole, Canadian goods exports were only 0.1% higher, as increases in gold have offset declines in most other product categories, notably steel (-30%), aluminum (-8%), forestry (-8%), and motor vehicles and parts (-2%). In contrast, imports have grown by a more typical 3.1%, and as a result trade will drag on overall GDP growth for 2025. However, the drag is reducing, and trade is on track to be broadly neutral or somewhat positive in Q4. We expect the drag from trade to continue to gradually decline though 2027.
- The share of Canadian exports bound for the U.S. has declined from 76% in 2024 to 68% by November, driven by a decline in exports to the U.S. and increasing exports to other countries. Exports to the U.S. fell 1.8% m/m and were down 13.3% y/y. Exports to other countries dropped 4.9% in November but remained nearly 30% higher compared to the previous November thanks to growth earlier in the year—though much of this has been driven by elevated overseas exports of gold. A similar dynamic is playing out on the import side, as the share of imports from the U.S. has fallen from over 60% to 56% in November.
- The overall U.S. trade balance increased in November, after having fallen in October to its smallest since May 2009. Imports have been trending lower, though increased 5% in November—led by pharmaceuticals and computers. U.S. exports fell 3.6% in November but were up 5.9% y/y.
- The changes to the U.S. trade balance also reflect compositional changes to U.S. trade flows. Comparing November 2025 to November 2024, U.S. imports were significantly lower from China (-44%), Canada (-14%), and the EU (-9%)—and higher from Mexico (+8%) and the rest of the world (+12%).
- U.S. customs data show that the proportion of Canadian goods imported into the U.S. facing tariffs has settled at around 12%, down from 20–25% in 2024 (due to the increased incentive for firms to submit CUSMA compliance paperwork).
- Canada continues to benefit from a (relatively) low effective tariff rate on exports to the U.S. (6.3% is our current estimate, based on pre-tariff trade flows) thanks to most of our trade continuing on a tariff-free basis under CUSMA. The best estimate of the average actual duty paid on U.S. imports from Canada seems to have settled just below 4%, though this figure may not include all trade levies.
- The U.S. import tariffs continue to create inflationary pressures in that country, with the latest estimate of the cumulative impact of the tariffs on U.S. CPI above 0.6 percentage points, clouding the outlook for U.S. interest rate cuts.
- With the U.S. Supreme Court expected to rule on the legality of the IEEPA tariffs soon, there could be renewed turbulence in the ongoing U.S. global trade war in the coming weeks. If these tariffs are struck down, these could be replaced under a new mechanism—which would likely again be challenged, leading to renewed uncertainty. For Canada, the sectoral tariffs are by far the most impactful, and will continue to weigh on the Canadian economy as long as they remain in place.
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