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Economic News

Canada: The Trade Balance Is Back in Black Thanks to Gold and Oil

May 5, 2026
LJ Valencia
Economic Analyst

Highlights

  • Canada’s international merchandise trade balance turned into a $1.8B surplus in March 2026 from a $5.1B deficit in February (graph 1). This was larger than the consensus expectation for a $2.5B deficit. See table for more details.
  • Goods exports rose 8.5% m/m, of which volumes increased 2.2%. Imports were down 1.6%, with volumes falling by 2.5%.
  • Canada’s trade surplus with the US widened from $2.9B to $7.1B in March, reaching the highest level since September 2025 (graph 2). Meanwhile, the trade deficit with countries other than the United States narrowed from $8.0B to $5.3B, the smallest since January 2021.
  • The services trade surplus of $0.1B in February turned into a $0.1B deficit in March. Exports of services increased by 0.5% m/m while services imports were up 1.7% in the month.

Comments

Canada’s trade data is always full of surprises. While a trade surplus in March is welcome, it was completely unexpected. The trade balance returned to the black for the first time since September 2025, and is bested recently only by the trade surplus posted in January of last year.

Seven of the 11 export categories recorded gains in March. Exports of metal and non-metallic mineral products saw the largest gains, up 24% m/m. This came largely on the back of higher gold shipments to the United Kingdom. Energy exports rose 15.6%, increasing to its highest level since September 2022, mainly thanks to a spike in global oil prices due to the Iran conflict External link.. Exports of motor vehicles and parts posted gains (4.5%), reflecting higher auto production in the month.

On the other side of the trade balance, decreases were observed in eight of the 11 import categories. Imports of consumer goods decreased (-3.9% m/m). In addition, imports of aircraft and other transportation equipment dropped sharply (-12.8%) as Canada saw lower imports of commercial aircraft from the United States.

Implications

Despite the trade surplus in March, net exports are expected to be a drag on Q1 output growth. That’s because exports volumes dropped 2.4% q/q annualized in the quarter while real imports rose 14.0%. We anticipate real GDP growth of around 1.5% annualized in Q1 2026, subject to upside risk given the strength of the March trade data. This is in line with the Bank of Canada’s outlook published in the April 2026 Monetary Policy Report.

As our outlook External link. suggests, oil prices are likely to stay higher for longer as the conflict in the Middle East drags on. That's expected to boost business investment and net exports, especially in the energy sector, albeit at a cost to consumers. That said, uncertainty around the joint CUSMA review is a key headwind to economic growth and inflation. Given the risks, the Bank kept rates unchanged in its latest announcement External link.. We expect the Bank to remain on hold until 2027, but it remains prepared to act as circumstances change.

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.