Canada’s trade deficit ballooned in April to its highest level on record as exports of automobiles and parts to the United States plummeted on Donald Trump’s tariffs, Statistics Canada said Thursday.
The deficit came in at C$7.1 billion, more than triple the previous month’s figure in what Statistics Canada said “was the largest deficit on record.”
While exports to the United States have fallen by 26.2 per cent since January, Canada’s trade with other countries has reached “an all-time high,” led by exports to China, the United Kingdom, Algeria and Brazil, the agency said.
Diversifying Canada’s trade, however, was not enough to offset the drop in shipments to its largest trading partner to the south.
The deficit “came as a surprise to even the most pessimistic forecaster,” Desjardins analyst Royce Mendes said in a research note.
He shaved down his second quarter economic growth forecast to a maximum of 0.5 per cent.
CIBC Economics analyst Katherine Judge said the data means “Q2 as a whole is likely to show no GDP growth” due also to production curtailments and a weakening labour market.
Tariffs and countermeasures
The Trump administration announced — then halted, pending negotiations — several levies on Canadian imports into the United States in March and April, while Canada hit back with counter tariffs.
The American president targeted Canada’s automotive, steel and aluminum sectors in particular with levies of 25 per cent to 50 per cent.
As a result, exports of motor vehicles and parts led Canada’s exports drop.
“After tariffs on foreign motor vehicles were imposed by the United States at the beginning of the month, manufacturers in Canada reduced production in April, resulting in a sharp drop in these exports,” Statistics Canada explained.
That helped push Canada’s trade surplus with the United States down to C$3.6 billion.
Exports of consumer goods and energy products were also down sharply, the latter partly due to lower oil prices with lower demand driven by economic uncertainty over Trump’s protectionist trade policies.
Total exports dropped 10.8 per cent in April, while a sharp increase in inbound gold shipments moderated a 3.5 per cent decline in total imports.
