This monthly report will detail trade shifts in North America, highlight what we’re seeing in today’s dynamic trade environment, and identify what it might mean for growth going forward.
- Canada’s goods exports increased 2.1% in October, continuing their recovery since the Spring, and imports rose 3.4%—leading to a second consecutive month of an essentially balanced trade account. Unwrought gold drove the increase in exports again this month, and the increase in imports was driven by smaller increases in many categories, including electronics and electrical equipment, silver and platinum, and industrial machinery and parts.
- Compared to the same month last year, Canadian goods exports and imports were both up 0.9% in October. Significant increases in the value of gold exports (aided by sharply higher gold prices) have helped to offset lower exports in most other product categories, including those targeted by U.S. tariffs, such as steel (-37% y/y), aluminum (-27%), and forestry (-25%). Motor vehicles and parts were also lower for most of 2025 but have been bouncing back over the last three months and in October were nearly back to their level of a year ago.
- The share of Canadian exports bound for the U.S. has declined from 76% in 2024 to 67% by October, driven by a decline in exports to the U.S. and increasing exports to other countries. Exports to the U.S. fell 3.4% m/m and were down 6.9% y/y. Exports to other countries jumped up by 15% m/m and are now 22% higher y/y, though much of this has been driven by recent exports of gold.
- The overall U.S. trade balance in October was the smallest since May 2009. After widening drastically early in the year on tariff-front-running imports, the overall U.S. trade deficit has quickly narrowed significantly. Imports have been trending lower, and fell a further 3.2% in October—whereas exports have continued to steadily increase (up 5% y/y).
- The changes to the U.S. trade balance also reflect compositional changes to U.S. trade flows. Looking at the past three months compared to the same period last year, U.S. imports were significantly lower from China (-42%), Canada (-10%), and the EU (-9%)—and higher from Mexico (+3%) and the rest of the world (+8%).
- U.S. customs data show that the proportion of Canadian goods imported into the U.S. facing tariffs has settled at around 13%, 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 free-trade 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 may be somewhat underestimating the true duties paid as it does not include all trade-related levies.
- 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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