- April trade deficit at C$7.1 billion as exports drop 10.8%
- Record deficit driven by plunge in U.S. exports
- U.S. exports drop 15.7%, third monthly decline in a row
- Exports to the rest of the world, barring U.S., up 2.9%
OTTAWA, June 5 (Reuters) - Canada's trade deficit in April widened to an all-time high of a whopping C$7.1 billion ($5.2 billion), data showed on Thursday, as tariffs imposed by President Donald Trump sucked out demand for Canadian goods from the United States.
Canada's exports to the rest of the world rose, but could not compensate for the drop in exports to the U.S., data from Statistics Canada showed.
Exports to the U.S. shrank by 15.7%, a third consecutive monthly decline, Statscan said, adding that exports south of the border have fallen by over 26% since the peak seen in January.
Analysts polled by Reuters had expected the trade deficit to widen to C$1.5 billion in April. Statistics Canada also made a big revision to the trade deficit recorded in March to C$2.3 billion from C$506 million.
Canada shipped 76% of its total exports to the U.S. last year and trade between the two countries exceeded a trillion Canadian dollars for a third consecutive year in 2024.
But a barrage of tariffs from Trump on Canada and its C$90 billion worth of retaliatory tariffs on U.S. imports have started disrupting cross-border trade.
Total exports in April plunged by 10.8% to C$60.4 billion, the lowest level seen in almost two years, Statscan said, and the strongest percentage decrease in five years.
While exports to the U.S. led the drop, lower crude oil prices and a stronger Canadian dollar also contributed.
"The 11% fall in exports in a single month across almost every single sector signals the critical challenge that Canadian exporters are facing," said Ross Prusakowski, Deputy Chief Economist, Export Development Canada, adding that this would likely persist as tariffs have been implemented now.
The Canadian dollar was trading up 0.17% to 1.3651 to the U.S. dollar, or 73.25 U.S. cents. Yields on the two-year government bonds were down 0.4 basis points to 2.613%.
Exports to the rest of the world were up 2.9% and in volume terms total exports registered a big decline of 9.1% in April.
Prusakowski from EDC called Canada's trade with the rest of the world "a small silver lining" as exporters pursue other global markets.
The biggest drop in exports came from motor vehicles and parts which lost 17.4% of trade in April from March and was almost entirely attributable to exports of passenger cars and light trucks, which fell 22.9% in April, Statscan said.
Imports were down 3.5% in April to C$67.58 billion, but were partly offset by imports of unwrought gold.
Due to the sharp decline in exports to the U.S., Canada's merchandise trade surplus with the United States narrowed to C$3.6 billion, the smallest surplus since December 2020, the statistics agency said.
The deficit with rest of the world marginally increased to C$10.7 billion in April from C$9 billion in March.
Reporting by Promit Mukherjee; Editing by Dale Smith, Philippa Fletcher and Chizu Nomiyama
Source: Reuters