Canada’s trade surplus with the U.S. widened as did its deficit with the rest of the world, underscoring the major role its biggest trading partner and southern neighbour plays in its economy.

The surplus with the U.S. helped narrow the country’s overall deficit. In November, total imports exceeded exports for the ninth straight month, bringing the trade deficit to $323 million, down from $544 million in October, Statistics Canada reported Tuesday.

Economists in a Bloomberg survey were expecting a $900 million deficit that month.

Canada’s exports to the U.S. rose 6.8 per cent in November, while imports increased 4.1 per cent. Canada’s trade surplus with the U.S. widened to $8.2 billion that month, driven by gold shipments, from $6.6 billion in October. The U.S. remains by far Canada’s largest trading partner, responsible for 76 per cent of exports and 64 per cent of imports.

President-elect Donald Trump has threatened broad tariffs on Canadian goods destined for the U.S., raising alarm among government officials and industry groups. Canada’s economy depends on its ability to sell energy, cars, minerals and other goods to the U.S. Its consumers and businesses also rely heavily on American-made imports. Economists expect Trump’s levies to shave off two to four per cent off Canada’s gross domestic product and potentially plunge the economy into a recession.

Trump on Monday reiterated his complaint that U.S. trade deficit with Canada is a subsidy, saying in his Truth Social post about Prime Minister Justin Trudeau’s resignation that “the United States can no longer suffer the massive Trade Deficits that Canada needs to stay afloat.” The deficit is a consequence of the U.S. buying more than four million barrels per day of oil from Canada, its biggest supplier of the product.

“Nothing here to change the view of another Bank of Canada cut in January, but things could get murky after that with the Canadian dollar already much weaker,” Benjamin Reitzes, rates and macro strategist at Bank of Montreal, said in an email. “Tariffs continue to be a dark cloud hanging over Canada and trade in particular.”

During his first term, Trump used tariffs as a tool to redirect trade flows. His renegotiation of the North American trade pact was aimed at rebalancing trade with Canada and Mexico, but U.S. trade deficits continued to rise even after he inked the agreement in 2018.

Exports to countries other than the U.S., on the other hand, fell 10.3 per cent in November, driven by lower exports of gold to Hong Kong and nickel to Norway. Imports from other countries excluding the U.S. declined 1.9 per cent.

Statistics Canada warned that a Canada Border Services Agency initiative had delayed some October and November import data and estimates had been added to the collected values. The statistics should be used with caution and significant revisions are possible, it said.

The agency also flagged that the depreciation of the Canadian dollar since October has impacted import and export statistics. In volume terms, exports rose 0.5 per cent in November, while imports rose 1.4 per cent.

“Canada’s merchandise exports have gone up again, thanks to higher prices and a weaker dollar,” Andrew DiCapua, senior economist at the Canadian Chamber of Commerce, said in a report to investors.

“But because CBSA changed how they collect data, it’s tough to pinpoint any clear trends for the last few months of 2024. So far, it doesn’t look like Canadian exporters are really cashing in on the weaker dollar or the growing demand from US buyers.”

The third consecutive rise in export volumes in November provides further evidence that the economy was gaining momentum at the end of last year, Stephen Brown of Capital Economics told investors in a report.

“US tariffs could cause the recovery to go into reverse this year, but that threat might provide some further support in the near term if U.S. importers try to front-run the tariffs.”

—With assistance from Erik Hertzberg.

Bloomberg.com