StatCan reports $1.5B trade deficit for February as exports fell

CIBC senior economist Katherine Judge said a tariff front-running boost to exports reversed sharply in February, causing Canada’s trade balance to swing to a deficit.

The trade report came a day after U.S. President Donald Trump announced new reciprocal tariffs on many countries around the world, sparking concerns of a global recession.

“Looking ahead, although USMCA goods were exempt from tariffs in March, U.S. businesses appear to have accumulated enough inventory in prior months, and exports will remain under pressure as a result,” Judge wrote in a report.

“Export demand will also be dented for autos, steel/aluminum, and lumber, which are subject to previously announced tariffs, despite Canada escaping the reciprocal tariffs. Moreover, a higher effective tariff rate on U.S. imports as a whole will work to slow U.S. and global growth and will weigh on export demand for Canada ahead.”

Statistics Canada said total exports dropped 5.5% to $70.1 billion in February as exports of energy products fell 6.3%.

Exports of crude oil fell 4.2% on lower prices, while refined petroleum product exports dropped 15.3% due to lower shipments of diesel, mainly to the United States and Panama. Coal exports plunged 26.9% and natural gas exports lost 8.9%.

Meanwhile, total imports gained 0.8% at $71.6 billion in February, boosted by a 5.8% increase in imports of motor vehicles and parts and a 3.1% increase in industrial machinery, equipment and parts.

In volume terms, total exports dropped 5% in February, while total imports in volume terms were essentially unchanged for the month.

Regionally, Canadian exports to the U.S. were down 3.6% in February after reaching a record high in January, while imports from the U.S. rose 2.5% resulting in a merchandise trade surplus with the U.S. of $10.6 billion in February compared with a record of $13.7 billion in January.

Canada’s exports to countries other than the U.S. fell 12.4% in February, while imports from countries other than the U.S. moved down 2% for a record trade deficit with countries other than the U.S. of $12.1 billion in February compared with a deficit of $10.6 billion in January.

In a separate report, Statistics Canada said the country’s monthly international trade in services deficit increased to $700 million in February compared with $600 million in January as exports of services fell 1.6% to $17.7 billion and imports of services dropped 0.8% to $18.3 billion.

When international trade in goods and services are combined, Canada’s trade balance with the world was a deficit of $2.2 billion in February compared with a surplus of $2.6 billion in January.