MNI: Canada Trade Surplus With U.S. Poised To Slim For 2nd Yr
Canada's trade surplus with the U.S. is on track to narrow for a second year with southbound exports slowing and imports hitting records, figures taking on greater significance as Donald Trump threatens a 25% tariff when he takes office this month.
Statistics Canada said Tuesday from Ottawa that exports to the U.S. from January to November of 2024 were CAD538 billion, down from CAD544 billion in the same period of 2023 and a record CAD546 billion in 2022. Imports from the U.S. from January to November grew to CAD447 billion in 2024 from the prior CAD444 billion, which the agency said is a record.
Those flows left Canada's merchandise trade surplus with the U.S. at CAD91 billion from January to November, down from CAD100 billion in 2023 and the record CAD111 billion in 2022. With just December figures to report, Canada's U.S. trade surplus seems unlikely to exceed the full-year figures of CAD108 billion in 2023 and CAD119 billion in 2022.
Canada's trade balance across all nations showed a deficit for a ninth straight month in November, StatsCan said. The report showed little chill from Trump's tariff threat he posted online late in the month. Officials have warned the tariffs pose a grave threat to Canada, which sends three-quarters of its exports to the U.S. under a free trade agreement Trump himself renewed during his first term as president.
Trump threatened trade levies against Canada and Mexico citing complaints about border security. Official figures from Canada and the U.S. show little illicit migration or fentanyl enters from the north. Canada’s dollar has fallen to the weakest in several years partly because of the tariff threat, though traders say the bigger drivers are faster BOC rate cuts to fend off slow growth.
Former BOC Deputy Tim Lane has told MNI that fully enforced U.S. tariffs will bring recessionary conditions to Canada. Former central bank economist David Watt says it would also justify another half-point BOC rate cut at the Jan. 29 decision. Bank Governor Tiff Macklem has said he’ll only set policy based on enacted proposals, and one deputy has suggested two-sided tariff risks from lower growth but also quicker inflation.
The prospect of a trade war added even more pressure on Prime Minister Justin Trudeau to announce his resignation as he did Monday. Trudeau said he’s staying until March 24 to allow for a leadership race. Canadian officials had hinted at a return to the dollar-for-dollar retaliatory tariffs seen during Trump’s first term.
The two countries have a long history of shifting support for free trade. Canada needed a hotly contested election before Brian Mulroney won a mandate to ink a trade deal with Ronald Reagan, and Canada was founded in 1867 partly on a deal to create a strong domestic industrial economy in resistance to potential U.S. domination. Fights over softwood lumber have gone on for more than a century.