Canada’s trade deficit narrowed to $506 million in March, beating expectations as imports fell at a faster rate than the drop in exports, data showed on Tuesday.
Imports of goods dropped 1.5 per cent in March, driven by a 2.9 per cent slump in imports from the U.S. after Canada imposed retaliatory tariffs on its neighbour following President Donald Trump’s 25 per cent tariff on Canadian steel and aluminum from March 12.
Exports to the U.S. also dropped by 6.6 per cent but was almost compensated by an increase in exports to the rest of the world, Statistics Canada said.
Analysts polled by Reuters had estimated the total trade deficit would widen to $1.56 billion in March, up from a revised $1.41 billion in February.
Trump’s tariff threats had pushed Canadian firms to advance supplies south of the border, boosting trade surpluses in December and January. But as the tariffs took hold, shipments to the U.S. have squeezed.
The U.S. is Canada’s biggest trading partner and Trump’s tariffs have hurt trade, investments and jobs on both sides of the border.
Prime Minister Mark Carney will be meeting Trump on Tuesday to start talks on a comprehensive trade and security deal, which experts have said could eventually lead to reducing the burden of tariffs on Canada.
Canada’s overall exports for March sat at $69.9 billion, down from $70.04 billion in February, led by the U.S. This was the second month in a row where exports fell.
“Despite the two consecutive monthly declines, export levels remained relatively high in March, posting a 10.2 per cent increase compared with the same month a year earlier,” Statistics Canada said, adding that lower prices primarily led to the drop.
In volume terms, exports were up 1.8 per cent in March, the agency said. However, imports fell in both value and volume terms.
They dropped for the first time in five months, with the largest contributors being metal and non-metallic mineral products (by 15.8 per cent) and energy products (by 18.8 per cent).
In volume terms, total imports edged down 0.1 per cent in March.
Imports in March were at $70.40 billion, down from $71.44 billion.
