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Economic News

Canada: Economy Posts Largest Trade Surplus Since May 2022

July 7, 2026
LJ Valencia
Economist

Highlights

  • Canada’s international merchandise trade surplus increased to $4.2B in May 2026 from an upwardly revised $3.4B in April (graph 1). This was above the consensus expectation for a $2.5B surplus. See table for more details.
  • Goods exports rose 0.9% m/m, but volumes declined 0.5%. Imports were down 0.2%, with volumes falling by 0.9%.
  • Canada’s trade surplus with the US also increased from $10.3B to $11.6B in May, reaching the highest level since January 2025 (graph 2). Meanwhile, the trade deficit with countries other than the United States expanded from $6.9B to $7.4B.
  • The services trade deficit widened from $0.2B in April to $0.5B in May. Exports of services rose by 0.9% m/m while services imports were up 2.0% in the month.

Comments

May’s trade surplus surpassed the expectations of private sector forecasters by a wide margin. The surplus increased to its highest level since May 2022, posting a third consecutive positive print.

Seven of the 11 export categories posted gains in May. Exports of metal ores and non-metallic minerals led the way (16.1%) higher. This was largely attributed to higher sulphur exports as lower shipments through the Strait of Hormuz constrained global supplies. Exports of metal and non-metallic mineral products grew (1.5%), mostly on the back of higher aluminum exports to Netherlands, Italy and Greece. That said, these export gains were somewhat offset by falling energy exports (-2.0%), mainly driven by lower crude oil exports despite still-elevated prices in the month.

On the imports side, nine of the 11 categories posted gains. Consumer goods imports rose (3.5%), primarily due to stronger imports of batteries and battery chargers from China. Despite these increases, total imports were weighed down by a sharp decline in metal and non-metallic mineral products (-18.2%), partly driven by lower gold imports from non-residents. Consequently, overall imports decreased in the month.

Canada’s trade partnerships continue to evolve. Despite stunted trade with the US, trade with other countries has risen (graph 3). Consequently, non-US countries now account for 30.3% of exports on a seasonally adjusted basis in May 2026, well above around 25% in the years before the pandemic.

Implications

Given the trade data, net exports are expected to boost Q2 output growth. We anticipate real GDP growth of around 1.5% annualized in Q2 2026. This is in line with the Bank of Canada’s outlook published in the April 2026 Monetary Policy Report External link..

Our forecast External link. continues to assume that oil prices remain elevated but slowly fall as tensions in the Middle East gradually ease. High prices should support investment and export activity in the energy sector, though they are likely to weigh on households and energy-dependent industries. Moreover, uncertainty around the US trade policy External link. remains a key headwind to growth and inflation. With these risks in mind, the Bank of Canada kept rates unchanged in its latest announcement External link. and we expect it to remain on hold until 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.