Canada experienced a positive shift in its trade balance in March, transitioning to a surplus driven by increased exports, particularly in crude oil and gold, alongside a decrease in imports. According to Statistics Canada, the country recorded a surplus of $1.78 billion in March, a notable improvement from the $5.11 billion deficit reported in the previous month.
This surplus marked the first time in half a year that Canada had a positive trade balance, largely attributed to the rise in crude oil prices due to geopolitical tensions in Iran, which bolstered export values from Canada. Despite a decrease in gold prices, strong global demand for the precious metal contributed to the overall increase in exports.
Experts surveyed by Reuters had anticipated a deficit of $2.88 billion, making the actual surplus a positive surprise. Total exports surged by 8.5% to reach $72.8 billion, with notable growth in the metal and non-metallic product category, which hit a record high with a 24% increase, and energy exports, reaching their highest level since September 2022 with a 15.6% rise, as per StatsCan data.
Excluding these categories, Canada’s exports demonstrated a modest 1.1% increase in value terms but experienced a slight decline of 0.3% in volume terms. Following a significant 24.9% boost in February, exports of motor vehicles and parts increased by 4.5% in March, according to the statistics agency.
Despite higher crude oil prices and a surge in passenger cars and light trucks exports to the U.S., Canada’s total exports to the U.S. rose by 8.3% to $48.51 billion in March, the highest level in a year. Conversely, imports from the U.S. decreased by 1.2% to $41.44 billion, resulting in a trade surplus of $7.1 billion with the U.S., the highest in six months. However, the share of exports to the U.S. dropped to 66.7%, the lowest on record, amidst ongoing trade tensions and tariffs imposed by the U.S.
In contrast, Canada’s exports to countries other than the U.S. reached a new peak in March, with a 9.1% increase, while imports from non-U.S. nations fell by 2.2% during the same period. Following the release of the trade data, the Canadian dollar saw a slight uptick of 0.03% to 1.3620, with money markets pricing in two potential 25 basis point rate cuts by the Bank of Canada by the end of the year.