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Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Sign In or Create an Account or Exports to the U.S. jumped by 8.1 per cent in August while imports were down 2.5 per cent, according to Statistics Canada data published Tuesday. While the new tariffs weren’t fully implemented until the end of August, Statistics Canada officials said U.S. President Donald Trump’s announcement on July 22 may have influenced trade patterns and prompted American customers to stock up to avoid additional costs.
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Please try again The Section 338 tariffs targeted roughly $27.6-billion worth in Canadian goods including auto, dairy and alcohol. Many items that were previously exempt from the Section 232 tariffs under the Canada-U.S.-Mexico Agreement (CUSMA), like plastics, furniture and electronics, were also now subject to 50 per cent levies. Canadian counter-tariffs that were announced at the end of August weren’t reflected in Tuesday’s data because they took effect in September.
Meanwhile, Canada’s overall trade surplus widened to a four-year high of $4.2 billion in August after narrowing to $787 million in July. Total exports increased by 2.5 per cent month over month in August after falling by 2.6 per cent in July, mainly due to energy exports — particularly diesel to Peru, the United States, the Netherlands and the United Kingdom — which increased by 4.7 per cent. Gains were also broad-based, with eight out of 11 product sections reporting increases in exports for the month.
Exports in consumer goods; industrial machinery, equipment and parts; and electronic and electrical equipment and parts also helped widen the trade surplus. In real or volume terms, exports also rose by 2.5 per cent. “As expected, U.S. firms’ front-running ahead of the August 22 Section 338 tariffs was a contributor to the export gain,” wrote Marc Ercolao, an economist with TD Economics, in a note.
But that surge in exports might be temporary, he warned. While net trade will likely marginally boost the Canadian economy in the third quarter of 2026, some of August’s strength was borrowed from future activity. “This sets up a likely payback in September and beyond as tariffs, Canadian countermeasures and new U.S. import restrictions take hold, reinforcing choppy trade contributions to GDP,” he added.
Total imports decreased by two per cent in August, the first decline since January, driven mainly by imports of motor vehicles and parts, which fell by 8.8 per cent in August after a 8.3 per cent increase in July. Imports of metal and non-metallic mineral products were also down in August, as well as imports of metal ores and non-metallic minerals. In volume terms, imports were down by 1.1 per cent.
Statistics Canada noted that the appreciation of the loonie affected import and export values for August. The average value of the Canadian dollar increased by 1.1 cents U.S. that month, the largest monthly increase since December. When expressed in U.S. dollars, exports rose by four per cent in August while imports decreased by 0.6 per cent.
Exports to non-U.S. markets decreased by 8.5 per cent in August after increasing by 8.2 per cent in July. The largest contributors to this decline were exports of gold to the U.K., energy products to the Netherlands and aircraft and crude oil to France. Imports from non-U.S. markets also fell by 1.4 per cent in August, driven by lower imports of crude oil from Saudi Arabia as well as passenger car and light trucks from Japan and South Korea.
This was partly offset by higher imports from Germany and China. As a result, Canada’s trade deficit with countries other than the U.S. widened to $7 billion in August from $5.3 billion in July. Economists say Canada’s international trade outlook remains clouded, especially since a trade deal with the U.S. fell apart at the eleventh hour in late August.
“With the spike in exports tied heavily to U.S. tariff front-running, and some possible counter tariff front-running expected in imports in September, Canada’s trade position is likely to deteriorate and exports will remain under pressure in (the fourth quarter) unless a trade deal is reached,” wrote Katherine Judge, executive director and senior economist at CIBC Capital Markets, in a note. However, Ercolao said a major negotiating breakthrough between the U.S. and Canada by the end of the year is unlikely. “The direct macroeconomic hit should remain modest given the targeted scope of the most recent measures, but prolonged uncertainty risks delaying investment and hiring and potentially raising costs for businesses and consumers.” Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic.
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Source: Financial Post
