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Canada’s merchandise trade surplus widened to a four-year high in May, rising for the fourth consecutive month, as exports to the United States top its highest level since February last year, data showed on Tuesday.
Canada clocked a trade surplus of $4.24 billion in May, up 0.9 per cent from a revised $3.41 billion posted in the prior month, Statistics Canada said.
This was the third consecutive month of trade surplus for Canada and was led by a 1.5 per cent jump in exports to the U.S., its largest trading partner.
Analysts polled by Reuters had estimated the trade surplus to be at $2.85 billion.
As U.S. President Donald Trump’s tariffs slammed some critical sectors in Canada, businesses have been trying to diversify away from the U.S., which usually bought almost three quarters of Canada’s total exports.
But trade experts have said that while diversification is important, it might take time for many to unwind decades-old supply chain from the world’s biggest market.
U.S. exports rise
Exports to the U.S. rose 1.5 per cent to $53.72 billion, a fourth consecutive monthly increase, taking the share of exports headed south of the border to almost 70 per cent in May. Imports from the U.S. fell by 1.4 per cent.
As a result, Canada’s trade surplus with the United States widened to $11.6 billion in May from $10.3 billion in April, posting its largest surplus since the record high observed in January 2025, the statistics agency said. This could be due in part to higher prices for energy exports, Statistics Canada said.
The U.S. has declined to extend CUSMA beyond 2036 after a Canada Day meeting with Canadian and Mexican officials. Canada-U.S. Trade Minister Dominic LeBlanc explains why the decision wasn’t surprising and what comes next in the review of the trade agreement.
Exports to countries other than the U.S. continued to shrink, although at a lower rate in May than April, and imports from non-U.S. countries rose. This widened Canada’s trade deficit with countries other than the U.S. to $7.4 billion in May.
Crude oil exports fall
The major contributor to the monthly increase in exports was outbound shipments of metal ores and non-metallic minerals, which rose by 16.1 per cent, data showed.
This was largely driven by sulfur exports as its shipments passing through the Strait of Hormuz slowed since the conflict in the Middle East began.
The war in the Middle east had choked crude oil and fertilizer shipments, leading to higher demand and prices of the products from elsewhere. But shipments have been slowly returning since a ceasefire was reached in mid June.
Other product sections also saw notable gains in May, with widespread increases observed in consumer goods, industrial chemical, and farm and fishing food products, the data agency reported.
As oil prices surge, CBC’s senior business correspondent Peter Armstrong is keeping an eye on the latest international trade data — set to drop on Tuesday — and what it means for Canada’s economic growth.
However, crude oil and gold exports, which had previously contributed to Canada’s rising trade merchandise, dropped.
Energy exports dropped by 2 per cent due to lower crude oil volume exports, after a 43.1 per cent increase from February to April.
Total imports dropped by 0.2 per cent led by 18.2 per cent drop in metal and non-metallic categories imports in May.
Senior economist at BMO Robert Kavcic says the value of energy exports is still giving Canada’s trade figures a boost for now, even if energy exports have begun to drop.
“Canadian trade surpluses can come and go quickly with swings in oil prices, and this is probably the high watermark for now,” Kavcic wrote in a note to investors.
“Still, net exports look to add firmly to growth in Q2, another data point that suggests the Canadian economy has snapped out of its two-quarter funk.”
