In March 2024, Canada witnessed a notable decline in its merchandise exports, coupled with a decrease in imports, leading to a significant shift in its trade balance. According to data released by Statistics Canada, Canada’s merchandise exports saw a decrease of 5.3%, while imports were down by 1.2%. This shift resulted in Canada’s merchandise trade balance with the world transitioning from a surplus of $476 million in February to a deficit of $2.3 billion in March, marking the largest trade deficit since June 2023.
The decline in exports was widespread across various sectors, with nine out of eleven product sections experiencing decreases. Notably, the exports of unwrought gold, which had surged in February, experienced a significant downturn, contributing significantly to the overall decline. Similarly, exports of energy products, particularly crude oil and bitumen, faced a decline of 4.9%, attributed to factors such as refinery shutdowns in the US Midwest and decreased marine shipments.
The automotive sector also witnessed a decline, with exports of motor vehicles and parts falling by 6.3%, primarily driven by decreased exports of passenger cars and light trucks. This decline comes amidst a transition phase in Canada’s automotive manufacturing industry, marked by retooling activities in several manufacturing plants.
Furthermore, exports of farm, fishing, and intermediate food products declined by 9.2%, following a notable increase in February. Contributing to this decline were decreases in exports of various crop products and fresh fruit, nuts, and vegetables.
While imports in February had shown a notable increase, March saw a reversal of this trend, with a 1.2% decrease in total imports. This decrease was observed across seven of the eleven product sections, with notable declines in imports of electronic and electrical equipment, as well as metal ores and non-metallic minerals.
The decline in imports of electronic and electrical equipment and parts, particularly computers and computer peripherals, was significant, attributed to the absence of high-value data processing unit imports observed in February. Similarly, imports of metal ores and non-metallic minerals saw a notable decrease, driven by lower imports of alumina and copper ores and concentrates.
Canada’s trade with countries other than the United States saw a decline, with exports to these countries falling by 6.5% in March. Lower exports to Switzerland, France, and the United Kingdom contributed to this decline. Imports from countries other than the United States also decreased by 1.3%, partly due to lower imports from Mexico and Japan.
Meanwhile, trade with the United States also experienced a downturn, with exports falling by 5.0% and imports decreasing by 1.1%. Consequently, Canada’s merchandise trade surplus with the United States narrowed from $8.5 billion in February to $6.5 billion in March.
Looking at quarterly trends, imports in the first quarter of 2024 increased by 0.4%, driven by higher imports of electronic and electrical equipment and parts, consumer goods, and energy products. On the other hand, exports during the same period decreased by 1.4%, primarily due to lower exports of energy products and transportation equipment.
Revisions to February data showed slight adjustments in both imports and exports figures. Additionally, in March, monthly service exports and imports experienced declines of 2.0% and 1.4%, respectively.
When considering both goods and services, Canada’s total trade deficit with the world widened from $431 million in February to $3.3 billion in March, reflecting the overall decrease in exports compared to imports.