Canada’s trade balance shifted to a surplus in March due to a significant increase in exports propelled by higher crude oil prices and strong demand for gold, while imports decreased, according to recent data. Statistics Canada reported a surplus of $1.78 billion for March, a notable improvement from the $5.11 billion deficit recorded in the previous month. This marked the first surplus in six months for Canada, driven by the rise in crude oil prices amid tensions in Iran, boosting export values for the country. Although gold prices slightly dropped in March, global demand for the precious metal continued to support export growth.
Analysts, who had anticipated a $2.88 billion deficit, were surprised by the positive trade balance. Total exports surged by 8.5%, reaching $72.8 billion, with a remarkable 24% increase in metal and non-metallic products to a record high, and a 15.6% rise in energy exports, hitting its peak since September 2022, as reported by StatsCan. Excluding these categories, the value of Canada’s exports saw a modest 1.1% increase, while volume terms experienced a slight 0.3% decline.
Furthermore, following a 24.9% rise in February, exports of motor vehicles and parts grew by 4.5% in March, according to the statistics agency. The U.S. remained a crucial trade partner for Canada, with higher crude oil prices and increased shipments of passenger cars and light trucks boosting exports to the U.S. by 8.3% to $48.51 billion, the highest level in a year. In contrast, imports from the U.S. decreased by 1.2% to $41.44 billion, resulting in a trade surplus with the U.S. hitting a six-month high of $7.1 billion. However, Canada’s share of exports to the U.S. dropped to a record low of 66.7%, influenced by the ongoing trade tensions and tariffs imposed by the U.S. in an effort to reduce the trade deficit.
Meanwhile, Canadian exports to countries other than the U.S. reached a new peak in March, rising by 9.1%, while imports from non-U.S. countries decreased by 2.2% during the same period. Following the trade data release, the Canadian dollar saw a marginal 0.03% increase to 1.3620. Market expectations suggest the possibility of two 25 basis point rate cuts by the Bank of Canada by the year’s end.
