OTTAWA: Canada’s trade deficit narrowed to C$506 million ($366.34 million) in March, beating expectations as imports fell at a faster rate than the drop in exports, data showed on Tuesday.
Imports of goods dropped 1.5% in March, driven by a 2.9% slump in imports from the United States after Canada imposed retaliatory tariffs on its neighbor following President Donald Trump’s 25% tariff on Canadian steel and aluminum from March 12.
Exports to the United States also dropped by 6.6% but was almost compensated by an increase in exports to the rest of the world, Statistics Canada said.
Analysts polled by Reuters had estimated that the total trade deficit would widen to C$1.56 billion in March, up from a revised C$1.41 billion in February.
Trump’s tariff threats at the end of last year and the beginning of this year pushed Canadian firms to advance supplies south of the border, boosting trade surpluses in December and January. But as tariffs took hold, shipments to the United States have been squeezed.
The United States is Canada’s biggest trading partner and Trump’s tariffs have hurt trade, investments and jobs on both sides of the border.
US trade deficit surges to record high in March
Canadian Prime Minister Mark Carney will meet with Trump on Tuesday to start talks on a comprehensive trade and security deal, which experts have said could eventually lead to reducing the burden of tariffs on Canada.
Economists and analysts have said that as the impact of tariffs flow through the economy, growth would take a hit. This is already evident in investment and hiring intentions of companies and consumer spending.
The Bank of Canada has said that it would act quickly and decisively if the economy takes a sharp hit, with money markets now estimating almost a 52% chance of a rate cut of 25 basis points in June.
The Canadian dollar was up 0.18% to trade at 1.3801 to the U.S. dollar, or 72.46 U.S. cents. Bond yields for the government’s two-year bonds were down 0.5 basis points to 2.557%.
Canada’s overall exports for March came in at C$69.9 billion, down from C$70.04 billion in February, led by the United States. This was the second month in a row when exports fell.
“Despite the two consecutive monthly declines, export levels remained relatively high in March, posting a 10.2% increase compared with the same month a year earlier,” Statscan said, adding that lower prices primarily led to the drop.
In volume terms, exports were up 1.8% in March, it said.
However, imports fell in both value and volume terms.
They dropped for the first time in five months, with the largest contributors being metal and non-metallic mineral products by 15.8% and energy products by 18.8%. In volume terms, total imports edged down 0.1% in March.
Imports in March were at C$70.40 billion, down from C$71.44 billion.
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