- Higher oil prices contribute to largest monthly Canadian trade surplus since January 2025 (chart 1). The value of Canadian exports rose by 1.6% in April, with the largest contribution from energy products but also gains in agriculture products and autos. The overall gain occurred despite a sizeable drop in exports of gold, following a very strong March. Imports increased 0.3%, led by lubricants and other petroleum refinery products, and despite a drop in gold. After adjusting for prices, export volumes rose 3% and imports fell 0.4% on the month (chart 2). The trade data have improved after a weak start to the year, and point to a rebound in Q2 after dragging on growth in Q1.
- The recent strong gold exports and higher energy prices are masking declines in some sectors. Exports are clearly lower in the goods categories targeted by the U.S. sectoral tariffs (chart 3) including: steel (-49% vs Dec 2024), aluminum (-11%), forestry (-19%), and motor vehicles and parts (-4%).
- The share of Canadian exports bound for the U.S. is gradually trending lower, averaging 76% in 2024 and 72% in 2025, and coming in at 69% in April 2026. This has been driven by a decline in exports to the U.S. and increasing exports to other regions—mainly Europe (chart 4). In April, exports to the U.S. rose 4.8% m/m and were up 5.7% compared to 2024. Exports to other countries dropped 4.8% m/m but were up 48.3% from 2024—though much of this has been driven by elevated overseas exports of gold. On the import side (chart 5), the share of Canadian imports from the U.S. has gradually fallen to 59% in April from an average of 62% in 2024.
- Canada continues to benefit from a (relatively) low effective tariff rate on total exports. 2.9% is our latest estimate (based on pre-tariff trade flows) of the increase in tariffs since end-2024, thanks to most of our trade with the U.S. continuing on a tariff-free basis under CUSMA. The reported average actual duties paid on U.S. goods imports from Canada was slightly above 3% for the fifth month in a row, down from close to 4% last Fall (chart 6). The proportion of Canadian goods imported into the U.S. facing tariffs rose from 17% to 19% in April (chart 7).
- The U.S. trade deficit is somewhat smaller than its pre-tariff level (chart 8). U.S. trade saw significant volatility early in 2025 in response to the tariffs, before stabilizing later in the year. In April, U.S. exports rose 2.6% and imports increased 2.0%, resulting in a decline of the trade deficit to US$56 bn, compared to around US$70bn in 2024.
- 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. core PCE at around 0.7% (chart 9)—clouding the outlook for U.S. interest rate cuts, especially given significant recent increases in oil prices.
- Tariffs and uncertainty (chart 10) continue to be elevated and dynamic. The replacement of the U.S. IEEPA tariffs with the temporary global tariff of 10% was positive for Canada (and many other U.S. trade partners), though the vast majority of our trade has been deemed CUSMA-compliant and thus exempt from those tariffs. It also appears that Canada will be largely exempt from the coming tariffs related to forced labour. The sectoral tariffs are by far the most impactful for Canada and remain significant headwinds for impacted sectors, though some tweaks were made on June 1st that should slightly lower the burden of the steel, aluminum, and copper tariffs until the end of 2027.
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