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Economic News

Canada: Trade Surplus Widened in August as New US Tariffs Took Effect Late in the Month

October 6, 2026
Nom du rédacteur
Kari Norman
Senior Economist

Highlights

  • Canada’s international merchandise trade surplus widened to $4.2B in August 2026 from $0.8B in July (graph 1). This was well above the consensus expectation for a $1.5B surplus. See table for details.
  • Goods exports rose 2.5% m/m, with volumes increasing by 1.0%. Imports were down 2.0%, while volumes fell by 1.7%.
  • Canada’s trade surplus with the United States widened from $6.1B to $11.2B in August (graph 2)—the largest recorded positive monthly change. Meanwhile, the trade deficit with countries other than the US grew from $5.3B to $7.0B.
  • The services trade surplus was $0.4B in August. Exports of services increased by 0.7% m/m while services imports were down 0.4% in the month.

Comments

August’s trade surplus came in well above the expectations of forecasters, marking a sixth consecutive monthly surplus. Canadian dollar strength understated the improvement in August trade. The loonie gained 1.1 US cents from July—its strongest monthly increase since December 2025. In US-dollar terms, exports rose 4.0% m/m, while imports slipped 0.6%.

Eight of the 11 export categories posted gains in August. Exports of energy products were up 4.7% m/m—the first increase since April. Exports of consumer goods rose 6.6%, in part due to shipments of gold and silver coins to the US. New tariffs External link. announced in July and taking effect in late August may have encouraged shipments across several categories to be brought forward, as exports to the US surged 8.1%.

Imports decreased for the first time since January, with five of 11 product categories posting declines. Lower imports were observed in motor vehicles and parts (-8.8% m/m), as well as metal ores and non-metallic minerals (-15.5%) and products derived from them (-7.0%). These losses were partly offset by higher imports of energy products (6.7%) and industrial machinery, equipment and parts (3.5%).

Canada’s trade partnerships are evolving. The diversification story softened in August but remains intact. Exports to countries other than the US fell 8.5% following July’s strong gain, while their share of Canadian exports eased to 30.2% from 33.9% (graph 3). Even so, the non-US share remains well above the roughly 25% seen in the years before the pandemic, suggesting Canada’s trade relationships continue to broaden beyond the US. Moreover, once the full effects of new tariffs External link. are felt in trade data in the coming months, we could well see the US share of exports drop again.

Implications

We anticipate real GDP growth of around 2.0% annualized in Q3 2026, above the Bank of Canada’s outlook published in the July 2026 Monetary Policy Report. Still, uncertainty surrounding US trade policy remains a headwind to growth. On the other hand, sustained high energy prices amid the ongoing conflict in the Middle East, alongside retaliatory tariffs, is adding to inflationary pressures. This could bring forward the timing of the Bank’s next rate hike from our current call for Q1 2027.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.