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Economic News

Canada: Higher Gold Imports Widened the Trade Deficit

April 2, 2026
LJ Valencia
Economist

Highlights

  • Canada’s international merchandise trade deficit widened to $5.7B in February 2026 from $4.2B in January (graph 1). This was larger than the consensus expectation for a $2.5B deficit. See table for more details.
  • Goods exports rose 6.4% m/m in the month, of which volumes increased 5.2%. Imports were up 8.4%, with volumes rising by 9.4%.
  • Canada’s trade surplus with the US fell from $4.9B to $1.7B in February, the smallest surplus since May 2020 (graph 2). Meanwhile, the trade deficit with countries other than the United States narrowed from $9.1B to $7.5B.
  • The services trade’s balanced position in January turned into a $0.4B surplus in February. Exports of services increased by 1.5% m/m while services imports were down 0.7% in the month. 

Comments

Nine of the 11 export categories recorded gains in February. Exports of motor vehicles and parts increased 24.2% m/m, reflecting a rebound in Canadian motor vehicle production following prolonged seasonal stoppages. This rebound also coincided with higher motor vehicle production in the US. Exports of metal and non-metallic mineral products also saw a notable rise (11.2%), mainly due to higher gold shipments to the United Kingdom. Exports of farm, fishing and intermediate food products rose 10.5% in February, largely on the back of higher shipments of barley and soybeans to China.

On the other side of the trade balance, all but one of the 11 import categories saw increases. Imports of metal and non-metallic mineral products sharply rose in the month (45.6%), mostly due to higher purchases of gold as well as waste and scrap metal from the US. There were higher imports of motor vehicles and parts (5.9%), largely coinciding with the February rebound in domestic and US motor vehicle production. Imports of energy products posted notable gains (20.1%) mainly due to higher shipments of crude oil, bitumen and aviation fuel from the US. 

Implications

Given the larger trade deficit in February, net exports are anticipated to be a drag to Q1 output growth. Notably, US import tariffs External link. remain low thanks to a high rate of compliance with the Canada-United States-Mexico Agreement (CUSMA), which exempts most Canadian goods exports destined to the United States from duties. We now expect real GDP growth to be within the range of 1.5% to 2.0% annualized in Q1 2026, close to the Bank of Canada’s tracking of 1.8% growth from the January 2026 Monetary Policy Report External link..

As our outlook External link. suggests, the Iran conflict presents an upside risk to economic growth and the trade balance. In addition, the diversification of trade via Canada’s west coast should be another tailwind to export growth. That said, trade disruptions and uncertainty persist. Our latest research External link. suggests that adverse outcomes from the joint CUSMA review could detrimentally impact Canada’s growth trajectory. As such, it continues to weigh heavily on the minds of Canadian policymakers and central bankers External link. despite the recent energy price shock. 

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.