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Trade News

Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.


Canada's Trade Deficit Narrows More Than Expected on Imports

Tuesday, March 13, 2018 > 10:37:25


Canada’s merchandise trade deficit was smaller than forecast in January, with a drop in imports from a record high outpacing a decline in exports.

The deficit of C$1.91 billion ($1.48 billion) was the product of a 4.3 percent decline in imports and a 2.1 percent drop in exports, with shipments in both directions falling at the fastest pace since July, Statistics Canada said Wednesday in Ottawa. Economists surveyed by Bloomberg had forecast a deficit of C$2.5 billion and Statistics Canada also reduced the estimated deficits for the prior two months. That suggests less of a drag on growth from trade.


There was some evidence the import weakness may be short- lived. The January decline reflected the end of a boom in shipments of industrial equipment before tougher environmental rules took effect and a rush to buy cellphones over the holiday season.

Parts of the export decline appear to be longer-lasting, including a 6.6 percent drop in forestry products after U.S. duties were imposed in December, and another month marked by shutdowns in the country’s auto industry. Statistics Canada also noted Canada’s currency strengthened by 2.2 cents against the U.S. dollar in

January, making exports costlier.

Canada’s trade balance has now been in deficit since February 2017.|

Big Picture

Trade is one of the most closely watched parts of the Canadian economy this year, given the uncertainty for exporters around U.S. threats to tear up the North American Free Trade Agreement and impose tariffs on steel and aluminum. Canada is already poised for slower growth of 2 percent in 2018, from a Group-of-Seven leading 3 percent last year, as consumer spending fades.

Other Details

Imports of industrial machinery and equipment dropped 11.3 percent in January after two strong gains. Electronics imports fell 6.3 percent, led by cellphones from China.

Exports fell in seven of 11 major categories, and imports fell in every major component.

One area of export strength was energy, which rose 2.9 percent in January for the sixth straight monthly increase, reflecting higher prices. Non-energy exports fell 3.2 percent.

Canada’s trade surplus with the U.S. narrowed to C$3.1 billion from C$3.6 billion, led by lower auto exports.

Stripping out price changes, the volume of imports fell 3.9 percent, with export volumes down 3.6 percent.

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