- In October, Canada recorded a larger-than-expected trade deficit with the world, while its surplus with its top trading partner, the United States (U.S.), fell to its lowest this year, data showed on Thursday.
- Canada's overall trade deficit narrowed to C$924Mn in October, Statistics Canada said. It was Canada's eighth consecutive monthly trade shortfall, as exports could not overtake imports despite a rise in exports for the first time since June. Analysts polled by Reuters had forecast a C$790Mn deficit in the month.
- Meanwhile, Canada's trade surplus with the U.S. specifically – which buys more than three quarters of Canada's total exports – shrank to C$6.17Bn in October, the lowest it has been this year. Exports to the U.S. fell by 2.8% on a monthly basis and 8% on an annual basis, Statscan said, adding that inbound shipments from south of its border rose 1.1% monthly and 1.9% yearly.
- Data on the shrinking surplus comes amid incoming US president Donald Trump’s threats to impose 25% tariffs on all products imported from Canada.
- Although Canada is the second biggest trading partner for the U.S., after Mexico, Trump indicated the 25% tariff would remain in effect until Canada clamped down on drugs and migrants flowing into the U.S.
- According to Shelly Kaushik, an economist at BMO Capital Markets, the threat of tariffs from the U.S. makes it difficult to predict how Canada's gross domestic product will evolve next year. She also noted that "The outlook for 2025 is clouded by trade/tariff uncertainty," However, she said the overall trade numbers for October were largely neutral in terms of its contribution to fourth quarter growth.
(Source: Reuters)
