Canada’s international merchandise trade saw a significant shift in December 2024, as the country moved from a trade deficit to a surplus, ending the year on a positive note. According to the latest data from Statistics Canada, exports rose 4.9% while imports increased by 2.3%. This resulted in a trade surplus of $708 million, reversing a $986 million deficit recorded in November. It was the first surplus since February 2024, signaling a potential turning point for Canada’s trade balance.
The export increase was driven by various sectors, particularly energy products, which saw a 9.5% surge. Crude oil, in particular, led the charge, posting an 11.0% increase in exports. The rise in energy exports, largely destined for the United States, helped mitigate a decrease in global energy prices compared to previous years. Despite this, Canada’s overall energy exports for 2024 were slightly higher than the last year, up 1.2% despite a 3.5% drop in energy prices.
Exports of metal and non-metallic mineral products also saw a notable rise, increasing by 9.2%, reaching a record high of $10 billion in December. The surge was largely attributed to a rise in exports of nickel and scrap metals to Norway, as well as higher shipments of non-ferrous metals and alloys to the United States. Additionally, motor vehicles and parts saw a 3.9% boost, led by exports of passenger cars and light trucks, including electric vehicles, which gained ground despite challenges in global car production.
Canada’s agricultural exports also contributed to the positive results, with wheat exports up 28.4% in December. The increased wheat production in the 2024 crop year helped boost Canada’s export of durum wheat, driving a 39.4% rise in exports during the fourth quarter.
Trade with the United States
The United States, as Canada’s largest trading partner, continued to play a crucial role in the trade performance. For the third consecutive year, Canada surpassed the $1 trillion mark in goods traded with the U.S. In December alone, Canadian exports to the U.S. rose by 5.0%, while imports from the U.S. decreased by 1.5%, leading to a wider trade surplus with its southern neighbor. The surplus amounted to $11.3 billion in December, up from $8.2 billion in November.
Energy products were the primary driver of this surplus, with Canada exporting $176.2 billion worth of energy products globally in 2024. The majority of these exports, however, were destined for the United States. In contrast, Canada imported $39 billion worth of energy products, most of which also came from the U.S.
While trade with the U.S. strengthened, Canada’s trade with countries outside of North America experienced mixed results. Exports to non-U.S. countries rose 4.9%, with notable gains in shipments to Germany, Norway, and Japan. However, imports from these countries surged by 9.0%, leading to a widening trade deficit with the rest of the world. Canada’s deficit with countries other than the U.S. expanded from $9.2 billion in November to $10.6 billion in December.
In total, Canada’s trade with the world resulted in a surplus of $641 million for December, a notable improvement from the $1.4 billion deficit in November.
Looking at the annual picture, Canada’s merchandise exports in 2024 increased by 1.0% from 2023, following a 1.8% decline the previous year. However, imports rose at a faster pace, up 1.9%, resulting in a widening trade deficit of $7.2 billion in 2024 compared to $610 million in 2023. The Canadian dollar’s depreciation played a role in this dynamic, as a weaker dollar increased the value of both imports and exports when expressed in Canadian dollars.
The dollar fell by 1.3 cents against the U.S. dollar in December, marking the largest monthly decline in 2024. When expressed in U.S. dollars, Canadian exports grew by 3.0%, while imports increased by 0.4%.
The December trade surplus between Canada and the United States highlights the ongoing strength of this crucial economic relationship. The U.S. continues to be Canada’s largest trading partner, and with exports like energy products driving the surplus, the reliance on this bilateral trade remains strong. However, the potential implementation of a 25% tariff would disrupt this dynamic significantly.
Such a tariff would likely increase costs on both sides of the border, harm Canadian industries, and strain the otherwise stable trade ties that benefit both countries.
It is short-sighted for some of our politicians to use the potential tariffs as a tool, to sway votes, as this gambit could ultimately backfire, causing long-term harm to trade and economic stability.
Moreover, promoting boycotts or anti-trade sentiment to rally support means only to undermine Canada’s international reputation and prosperity. A failure to understand the nuances of global trade can lead to misguided policies that would hurt not just the economy, but the livelihoods of Canadians who depend on open markets and cooperation.
Canada’s trade relationship with the U.S. is vital, it must be nurtured, not jeopardized by political posturing.