Canada’s merchandise trade deficit grew in August as gold shipment patterns shifted and U.S. tariffs weighed on exports, Statistics Canada said.
Merchandise exports fell 3% in August to $60.6 billion, pushing Canada’s trade deficit to $6.3 billion, up from $3.8 billion in July, the agency said Tuesday.
A drop in unwrought gold exports was a major factor, with the precious metals category seeing an 11.8% decline in August.
Exports of industrial machinery, equipment and parts also fell 9.5% in August, the first decline in four months.
Forestry product exports were down 10.1%, including a 25.4% drop in lumber and sawmill products, after higher U.S. tariffs on the industry took effect.
Consumer goods exports rose 3%, including a 22.2% jump in pharmaceutical and medicinal products, which could reflect buyers front-running U.S. pharma tariffs, said BMO senior economist Shelly Kaushik in a note.
“But most sectors posted declines,” she said.
“Looking through the noise, it’s clear that Canadian trade flows continued to face tariff-related headwinds in August.”
Kaushik noted that additional sectoral tariffs recently announced — including lumber, pharmaceuticals, heavy trucks and furniture — point to further challenges in the months ahead.
But while some categories still face tariff-related declines, TD economist Marc Ercolao said the August pullback was temporary and that net trade is still expected to contribute modestly to third-quarter GDP growth after an “exceptionally weak showing” in the second quarter.
“There is still considerable uncertainty on the trade front in the near term, but we believe the peak negative impacts from tariffs are in the rear-view mirror,” he said.
Imports rose 0.9% to $66.9 billion in August, boosted by metal and non-metallic mineral products, including large imports of unwrought gold. Excluding this product section, total imports fell 1%.
In volume terms, total exports fell 2.8%, while total imports dropped 0.3%.
Looking closer at aluminum exports this year, Statistics Canada said monthly shipments from April to August were down more than 24% compared with the monthly average of 2024.
The U.S. imposed 25% steel and aluminum tariffs in March and raised the rate to 50% in June.