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Economic News

Canada: Another Trade Surplus in July but the Winds Are Shifting

September 3, 2026
Randall Bartlett, Deputy Chief Economist • LJ Valencia, Economist

Highlights

  • Canada’s international merchandise trade surplus narrowed to $0.8B in July 2026 from an upwardly revised $4.2B in June (graph 1). See table for more details.
  • Goods exports fell 2.3% m/m in the month, with volumes falling by 2.2%. Imports were up 2.2%, with volumes jumping 2.7%.
  • Canada’s trade surplus with the United States narrowed from $10.3B to $5.9B in July (graph 2). Meanwhile, the trade deficit with countries other than the US shrunk from $6.1B to $5.1B.
  • The services trade balance moved back into black in July, posting a surplus of $0.3B following three consecutive months in the red. Exports of services advanced by 1.2% m/m while services imports were down 1.1% in the month.

Comments

The July trade numbers marked a fifth consecutive positive balance. However, at $0.8B, the trade surplus came in well below the expectations of private sector forecasters ($3.2B).

July marked the first decline in exports in six months, with seven of 11 categories falling. Metal and non-metallic mineral products led the decline (-8.5% m/m), driven by lower exports of unwrought gold, silver, and platinum group metals (-13.1%) amid weaker foreign purchases of Canadian-held gold. Energy exports fell 4.4%, led by crude oil (-5.6%) as both prices and volumes declined. The drop in total exports was partly offset by a 34.9% increase in aircraft and other transportation equipment exports.

On the import side, six of 11 product categories posted gains. Motor vehicle and parts imports rose 11.4% m/m to a record high in July, supported by less extensive seasonal shutdowns at North American auto plants. This was the fifth monthly increase in the first seven months of 2026. Imports of metal and non-metallic mineral products climbed 9.3%, driven in part by higher shipments of copper anodes from Chile and increased purchases of gold in Canada held by US residents.

Despite reduced activity with the US, trade with other countries has been trending higher (graph 3). Consequently, non-US countries accounted for nearly 34% of Canada’s exports in July 2026, the highest share on record outside of the pandemic going back to at least 1997.

Implications

While another Canadian trade surplus is welcome, one shouldn’t read too much into it. Volatile shipments of gold, oil and other commodities continue to dominate monthly export movements. At the same time, tariff uncertainty is distorting import and inventory decisions, particularly in trade with the US. While the July 20 announcement External link. of possible 50% US tariffs on 5% of imports from Canada may have had some impact, any effects are more likely to emerge in August ahead of their August 22 implementation External link.. With Canadian counter tariffs set to take effect on September 8, trade data are unlikely to provide much clarity in the coming months. As the Bank of Canada noted yesterday External link., escalating trade tensions are increasing inflation risks and uncertainty around the broader economic outlook.

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.