Canada’s merchandise trade surplus with the United States nearly doubled to $11.2 billion in August, as U.S. businesses pulled shipments forward ahead of new American tariffs, according to Statistics Canada data released Oct. 6.
The overall goods surplus widened to $4.2 billion from $787 million in July. It was the sixth straight monthly surplus, according to figures reported by Canadian Mortgage Trends and TD Economics.
Total exports rose 2.5 per cent in August, rebounding from a temporary pullback in July. Exports to the United States climbed 8.1 per cent, lifting the surplus with Canada’s largest trading partner from $6.1 billion in July. Exports to all other countries fell 8.5 per cent after hitting a record high the month before.
Imports fell 2 per cent, the first decline in seven months. Imports of motor vehicles and parts dropped 8.8 per cent after record highs in July, TD Economics said. Imports of metal ores and non-metallic minerals fell 15.5 per cent, which TD attributed largely to volatile gold, silver and platinum shipments.
Energy led the export gains. Shipments of energy products rose 4.7 per cent, driven by crude oil, diesel and nuclear fuel, TD said. Consumer goods rose 6.6 per cent and industrial machinery, equipment and parts climbed 10.1 per cent. Eight of 11 product groups increased.
The timing matters. TD said U.S. firms moved goods ahead of the Aug. 22 tariffs imposed under Section 338, which boosted August exports. Talks between Ottawa and Washington collapsed that same day, and Prime Minister Mark Carney said Canada would begin retaliatory tariffs on Sept. 8, according to coverage by CNBC and Al Jazeera at the time.
TD economist Marc Ercolao said “some of August’s strength borrows from future activity.” He said he expects exports to reverse in September and beyond as tariffs, Canadian countermeasures and new U.S. import restrictions take effect.
So a record-looking U.S. surplus does not signal a healthier trade relationship. It reflects a rush to beat a deadline, and the numbers for the months after the tariffs began are the ones that will show the damage.
TD said net trade is still tracking toward a slight boost to third-quarter growth, but it expects trade’s contribution to be choppy. Its report said risks are tilted to the downside and that “a major negotiating breakthrough before year-end appears unlikely.”
The direct macroeconomic impact should be modest given the targeted scope of the measures, TD said. It cautioned that prolonged uncertainty could delay business investment and hiring and raise costs for businesses and consumers.
The U.S. bans on Canadian alcohol, whey and motorcycles that took effect in late September, reported earlier by Canada News Media, fall into the category of new import restrictions that TD expects to weigh on exports. Workers and businesses in those sectors are likely to feel the shift before it shows up in national totals.
September trade figures, due in early November, will be the first full month after the tariffs and Canadian countermeasures were in place. Statistics Canada is also set to release September employment data on Friday, Oct. 9.
This story is developing. The figures come from secondary reports of the Statistics Canada release and TD Economics analysis; the agency’s own release page could not be accessed for this report.
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Via TD Economics and Canadian Mortgage Trends, citing Statistics Canada.
