MNI 5 THINGS:Canada Goods Trade Gap Narrows Despite US Tariffs>

--5 Things We Learned From Canadian Merchandise Trade Data

By Yali N'Diaye

     OTTAWA (MNI) - The following are the key points from the June data 

on the Canadian merchandise trade data released Friday by Statistics 

Canada: 

     - The goods trade deficit narrowed to C$0.6 billion in June, the 

smallest since January 2017, while analysts in a MNI survey had expected 

a C$2.3 billion gap. The report was generally positive as the 

improvement was driven by stronger exports, and the deficit was revised 

down in May and April, supporting the Bank of Canada's narrative. 

     - Exports rose 4.1% on the month, the largest increase since 

November 2016, to a record high C$50.7 billion, with widespread gains 

across regions and categories. Volumes were up 2.1%, more than erasing 

May's 1.9% drop. On a sector basis, exports increased in 8 of 11 

sections, led by aircraft and other transportation equipment (+18.9%), 

as well as energy (+7.1%). Exports excluding energy rose 3.4%. 

Regionally, gains were also widespread, including a 2.5% increase of 

sales to the U.S. Exports to non-US countries rose 8.7% to a record 

C$13.6 billion. 

     - June was the first month that Canada's exports of steel and 

aluminum were hit by U.S. tariffs of 25% and 10%, respectively. On a 

customs unadjusted basis, steel exports to the U.S. plunged 36.8% after 

surging 40.0% from February to May, and compared to an average June 

decline of 0.2%. Aluminum exports to the U.S. fell 7.0% on the month 

after rising 28.5% from February to May, compared to an average June 

decrease of 2.3%. Canada retaliated with tariffs on imports of steel, 

aluminum and other products from the U.S., which will go into effect 

from July 1. 

     - Imports edged down 0.2% on the month to C$51.3 billion, following 

a 2.0% increase in May. Imports rose in seven categories, including a 

2.2% gain in industrial machinery, equipment and parts, an indicator 

followed by the BOC to gauge Canada's business investment activity. Real 

imports were down 1.3% on the month.  

     - On a quarterly basis, the trade deficit narrowed to C$4.9 billion 

in the second quarter from C$8.6billion the previous quarter. In real 

terms, the gap also decreased, to C$2.9 billion from C$5.4 billion, with 

exports up 3.8%, mainly on consumer goods and energy. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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