OTTAWA: Canada’s trade deficit in May met expectations and narrowed after a record breaking deficit in April, data showed on Thursday, as total exports rose and imports fell even as the impact of the U.S. tariffs dented shipments south of the border.
The trade deficit in May was at C$5.9 billion ($4.34 billion), down from a downwardly revised C$7.6 billion in the prior month, Statistics Canada said, led by a 1.1% increase in exports on a monthly basis which followed a 11% slump in April.
This was the first increase in exports in four months, Statscan said, and was driven by record exports to the rest of the world, excluding the U.S.
Exports and imports to the U.S. dropped to their lowest levels in May, barring the pandemic year of 2020.
Exports to the U.S., the destination for three quarters of Canada’s outbound shipments, fell for the fourth month in a row with May registering a drop of 0.9%.
In volume terms total exports were up 0.7% in May.
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President Donald Trump has imposed 25% tariffs on imports of Canada-made automobiles and 50% tariffs on imports of steel and aluminum from the north of the border. Canada has also imposedretaliatory tariffs on U.S.
This trade skirmish between the two countries whose bilateral trade surpassed a trillion Canadian dollars last year has depleted Canada’s exports and has hit the job market.
Canada’s Prime Minister Mark Carney and Trump have agreed to reach some form of a trade deal by July 21.
Canada’s total exports for May were at C$60.81 billion, up from C$60.12 billion in April, led by exports of metallic and non-metallic mineral products, Statscan said.
This category increased by 15.1% and was driven by mainly exports of unwrought gold which posted an increase of 30.1% to reach a record $5.9 billion.
“Most of the rise was attributable to higher physical shipments of gold to the United Kingdom,” the statistics agency said. Excluding metal and non-metallic mineral products, total exports were down 1.2%, it added.
As trade with the U.S. has dropped, Canadian companies have been scouting for opportunities to increase trade with rest of the world.
Exports to countries other than the United States rose 5.7% in May to reach a record high, Statscan said, but it was not enough to mitigate the impact of loss of exports to the U.S., as well as China due to a drop in canola and crude oil shipments.
Total imports dropped by 1.6% to C$66.66 billion, with imports from the U.S. falling by 1.2% in May.
The Canadian dollar slightly weakened after the trade data and was trading down 0.23% to 1.3615 to the U.S. dollar. Yields on the two-year government bonds were up 3.7 basis points to 2.706%.
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