Canada experienced a shift to a surplus in its merchandise trade balance in March, driven by increased exports due to higher crude oil prices and rising demand for gold. According to Statistics Canada, the country recorded a surplus of $1.78 billion in March, marking a significant turnaround from the $5.11 billion deficit in the previous month.
This surplus, the first in six months, was attributed to the boost in crude oil prices amid the Iran war, which raised the value of Canadian exports. Additionally, despite a drop in gold prices, the global demand for the precious metal contributed to further export growth.
Total exports surged by 8.5% to $72.8 billion, with notable increases in metal and non-metallic products by 24% and energy exports by 15.6%, reaching its highest level since September 2022. Excluding these categories, Canadian exports showed a slight increase in value terms but a slight decrease in volume terms.
March saw a 4.5% rise in exports of motor vehicles and parts following a substantial increase in February. The share of exports to the U.S. decreased, with higher crude oil prices and increased shipments of passenger cars and light trucks driving exports to the U.S. up by 8.3% to $48.51 billion. Meanwhile, imports from the U.S. decreased by 1.2% to $41.44 billion.
Canada’s trade surplus with the U.S. reached its highest point in six months at $7.1 billion, while the share of exports to the U.S. dropped to a record low of 66.7%. This decline is amidst the trade tensions with the U.S., as President Donald Trump imposed tariffs on Canadian goods to reduce the trade deficit.
In contrast, exports to countries other than the U.S. hit a new high in March, increasing by 9.1%, while imports from non-U.S. countries decreased by 2.2%.
Following the trade data release, the Canadian dollar experienced a marginal increase of 0.03% to 1.3620. Market expectations suggest that the Bank of Canada may implement two 25 basis point rate cuts by the end of the year.