Canada’s Global Trade Gap Narrows; US-Bound Exports Hit New Low

• Canada’s trade deficit narrowed in December, with Statistics Canada reporting a C$1.31Bn shortfall, improving from the revised C$2.59Bn deficit in November and undershooting the C$2.0Bn consensus forecast, as stronger export performance supported the external balance.
• Export growth was the primary driver of the improvement, with total exports rising 2.6% to C$65.63Bn, largely reflecting increased shipments of unwrought gold.
• Canada’s export dependence on the United States continued to decline structurally, with U.S.-bound exports accounting for 67.4% of total shipments, down from 76.2% a year earlier and marking the lowest share on record outside the pandemic period, despite a modest 1.1% increase in exports to the U.S. during the month.
• Diversification toward non-U.S. markets remained the dominant narrative, as exports to other countries reached a new record in December and surged 17.0% over 2025, led by gold exports to the United Kingdom alongside growth in select manufacturing segments.
• Bilateral trade dynamics with the United States softened modestly, as imports from the U.S. increased 3.5%, compressing Canada’s merchandise trade surplus with its largest partner to C$5.7Bn from C$6.5Bn in November.
• Trade balances with non-U.S. partners also improved, as imports from countries outside the United States declined 3%, narrowing the deficit with these markets to C$7Bn from C$9Bn, reinforcing the broader rebalancing in trade flows.
• This news release is in line with Canadian PM Mark Carney setting a goal for Canada to double its non-US exports in the next decade. This goal was set given that American tariffs are causing a chill in investment.

(Source: Reuters and AP News)