Shipping containers are stacked high at Halifax’s Fairview Cove terminal in this photo from 2017. In April, Canada recorded its biggest-ever trade gap — a deficit of $7.1 billion — as the country’s exports took a sharp downturn. The drop came largely due to tough tariffs imposed by the United States, which disrupted trade flows and hurt Canadian export sales.(Photo credit: Andrew Vaughan/The Canadian Press)
Canada has hit a historic low in its merchandise trade balance, posting a record-breaking $7.1 billion deficit in April, the highest ever recorded. This comes after a $2.3 billion shortfall in March, highlighting a growing concern for the country’s economic direction — especially as exports plunged and imports only slightly declined.
According to Statistics Canada, this dramatic decline in exports was largely influenced by the recent U.S. tariffs that took effect in May. Many Canadian businesses rushed to stock up on goods in March, anticipating the impending tariffs. But once they kicked in, the impact was clearly reflected in the April numbers.
Exports dropped 10.8% to $60.4 billion, their lowest point since June 2023. Some of the hardest-hit sectors included:
- Motor vehicles and parts – down 17.4%
- Consumer goods – down 15.4%
- Energy products – down 7.9%
Nathan Janzen, assistant chief economist at RBC Economics, noted the data wasn’t entirely unexpected, given the economic turbulence caused by the lead-up to and aftermath of the U.S. trade actions. Still, he emphasized that these numbers paint a grim picture of Canada's trade health.
Interestingly, this sharp fall in exports follows a surprising GDP boost in the first quarter. That growth was largely supported by strong net trade numbers and increased investment in equipment, most of which was imported. However, RBC warns this bounce won’t last, predicting that economic growth will cool significantly in the second quarter — a forecast that aligns with recent comments by Bank of Canada Governor Tiff Macklem.
Pedro Antunes, chief economist at the Conference Board of Canada, offered a sobering take. He pointed out that this isn’t just a matter of trade normalizing — it’s about exports falling from already weak levels. “This isn’t just a dip. It’s a clear sign of deeper issues in our trade sector,” he said. “We can only hope it’s temporary, because the ongoing trade tensions are hurting both Canada and the U.S.”
Adding to the strain, Canada’s trade with the U.S. — its largest trading partner — also weakened. Exports to the U.S. slid 15.7%, while imports dropped 10.8%. As a result, the trade surplus with the U.S. shrank to just $3.6 billion, the lowest since December 2020.
Imports across the board fell 3.5% to $67.6 billion, with motor vehicle parts down 17.7% and industrial equipment imports falling 9.5%.
Meanwhile, trade with other countries painted a mixed picture. Canada’s trade deficit with non-U.S. countries grew to $10.7 billion, up from $9 billion in March. However, there were some gains, with exports to non-U.S. countries rising 2.9% and imports climbing 8.3% to hit a new record of $29 billion.
As the country grapples with tariff effects and global trade uncertainties, economists and policymakers alike are watching closely — hoping this downturn is short-lived.
