MNI: Canada Trade Surplus With U.S. Narrows For A Second Year
MNI (OTTAWA) - Canada’s annual merchandise trade surplus with the U.S. narrowed for a second year to CAD102 billion in 2024, a sensitive figure that doesn’t jibe with Donald Trump’s complaint that bilateral trade subsidizes its northern neighbor by something like USD200 billion a year.
The annual surplus shrank from CAD108 billion in 2023 and CAD119 billion in 2022, Statistics Canada figures showed in a release Wednesday.
President Trump and Canadian Prime Minister Justin Trudeau on Monday paused a threatened tariff war for at least 30 days, something Trump had pledged to begin on his first day in office. Besides the idea of the trade imbalance itself, Trump has also made demands around border security, meeting a NATO spending target and mused about forcing Canada's 13 provinces and territories to become to the 51st State.
Canada's merchandise trade balance for the month of December showed little chill from Trump’s threat in the last week of November for a 25% tariff on all products from north of the border. The trade surplus with the U.S. that month widened to CAD11.3 billion from CAD8.2 billion. Industry experts have told MNI that some U.S. firms have accelerated shipments from Canada to build up stockpiles ahead of any tariffs.
Exports to the U.S. rose 5% in December, partly on energy products. Imports from the U.S. fell 1.5% on the month, StatsCan said. Canada's overall global merchandise balance swung to a CAD708 million surplus in December from a November deficit of CAD986 million, the first surplus since February.
Canada’s dollar fell to the weakest since 2003 partly because of the tariff threat, though traders say another driver has been faster BOC rate cuts to fend off slow growth. Governor Tiff Macklem is leading the G7 in cutting the policy rate to 3% from 5% starting in June and has said he's nowhere near the limit of a divergence with the Federal Reserve. Bank staff also estimated a trade war could push Canada into a recession this year, and that weakness would also offset much of the early rise in prices from new tariffs.
The prospect of a trade war with the nation buying three-quarters of Canada’s exports added even more pressure on Prime Minister Justin Trudeau before he announced earlier this year he would resign in March.
Many of Trump's claims about trade with Canada are hard to back up in data. Canada’s surplus in merchandise trade masks the country’s frequent deficit in services often linked to tourist trips. Over much of the last decade Canada has reported a global trade deficit, partly because of dwindling auto exports and lower prices for energy. China and Mexico have also grown as sources of U.S. imports. Finally, Canada accounts for less than 1% of illicit flows of fentanyl and migrants into the U.S. Trump has complained about.
A good chunk of Canada’s U.S. exports are goods such as crude oil, natural gas, uranium and critical minerals, which American officials have sought out in response to geopolitical threats. Trump imposed a 10% tariff on China this week.