Statistics Canada says the country’s merchandise trade deficit narrowed in December to $1.3 billion as growth in exports outpaced a rise in imports.
That compared with a revised deficit of $2.6 billion for November, which was initially reported at $2.2 billion.
For December, total exports rose 2.6% to $65.6 billion, boosted by an 18% increase in the metal and non-metallic mineral products group, which includes unwrought gold, silver, and platinum group metals, and their alloys — a category largely composed of unwrought gold.
Excluding the metal and non-metallic mineral products group, exports edged down 0.2% in December.
Total imports rose 0.6% in December to $66.9 billion as imports of motor vehicles and parts gained 5.1% for the month.
In volume terms, both exports and imports rose 1.4% for the month.
Looking through the volatile components that drove the headline numbers for the month, the big picture is that export demand appears to remain weak, said Alexandra Brown, North America economist at Capital Economics.
“The majority of other categories posted monthly declines, including metal ores and non-metallic minerals, chemicals, forestry products, industrial machinery, electronic and electrical equipment and consumer goods,” she wrote.
“Canada continues to have some success with gradually recalibrating towards non-U.S. trade partners, as exports to countries other than the U.S. once again reached a record high. However, this was mainly due to a pick up in the value of gold shipments to the U.K., which is unlikely to be sustained in coming months.”
Canada’s merchandise trade surplus with the U.S. was $5.7 billion in December compared with $6.5 billion in November as exports to the U.S. rose 1.1%, while imports increased 3.5%.
Meanwhile, exports to countries other than the U.S. hit a record high as they increased 5.8% in December, while imports from countries other than the U.S. fell 3%. Canada’s trade deficit with countries other than the U.S. was $7.0 billion in December compared with $9.0 billion in November.
For the full year, Canada posted a trade deficit of $31.3 billion, the largest deficit since 2020 as exports edged down 0.2%, while imports increased 2.8%.
Canada’s trade surplus with the U.S. was $81.6 billion for the year, down from $101.3 billion in 2024, as exports to the U.S. fell 5.8%, while imports from the U.S. decreased 2.9%.
TD Bank economist Marc Ercolao said the review of the trade agreement between Canada, the United States and Mexico will be in full focus over the coming months.
“While the base case is that the agreement remains in place, scenarios involving U.S. withdrawal could expose Canadian exporters to significantly higher tariffs and prolonged policy uncertainty, weighing on business confidence and investment,” Ercolao wrote in a report.
“The pending U.S. Supreme Court ruling on the legality of IEEPA tariffs could also affect potential outcomes.”