Canada’s trade deficit narrowed sharply in March as imports and exports declined.
Merchandise imports fell 1.5% to $70.4 billion, while exports edged down 0.2%. The result was a $506 million trade deficit, down from $1.4 billion in February.
The decline in exports came with the new tariffs in early March. Exports to the U.S. fell 6.6%, but it was mostly offset by a strong 24.8% increase in shipments to other countries, including the United Kingdom, the Netherlands, and Hong Kong.
Despite the monthly drop, exports remained 10.2% higher than the same month a year earlier. In volume terms, exports actually rose 1.8%, suggesting lower prices were a major factor behind the headline decrease.
Consumer goods exports saw the biggest decline, falling 4.2%. Meat product exports dropped 10.8%, largely due to reduced pork shipments to Asia. Exports of pharmaceutical products also fell, down 7.0%, mainly because of weaker demand from the U.S.
Energy exports were down for a second month in a row, declining 2.2%. This was driven by lower shipments of uranium and natural gas, which were impacted by lower global prices.
On the positive side, vehicle exports rose 7.7%, thanks to strong demand for passenger cars and light trucks. This helped recover losses seen in February and came just before new U.S. tariffs on foreign-made vehicles took effect in April.
Exports of building materials, farm and food products, and mineral ores also increased, softening the overall decline in exports.
Imports fell in March for the first time since September 2024. The largest drops were seen in metal and mineral products (down 15.8%) and energy products (down 18.8%).
These declines came with Canada’s tariffs. Imports of unwrought gold and other precious metals plunged 69.7%, while imports of iron and steel also dropped. However, imports of aluminum products rose nearly 15%.
Canada’s merchandise trade surplus with the U.S. fell from $10.8 billion in February to $8.4 billion in March. Despite recent declines, exports to the U.S. were still 2.5% higher than they were in November 2024.
Meanwhile, the trade deficit with non-U.S. countries narrowed from a record $12.2 billion in February to $9.0 billion in March.
Looking at the first quarter of 2025, total exports rose 6.0% to $214.0 billion—a record high. Imports also reached a new high of $212.8 billion, up 5.2% from the previous quarter. This shift turned Canada’s quarterly trade balance from a deficit into a $1.2 billion surplus.
Canada’s trade in services also shifted slightly in March. Exports of services rose 0.3%, while service imports fell 0.9%. Combining goods and services, Canada’s total trade deficit stood at $942 million—less than half of February’s $2.1 billion.
It is clear how much Canada depends on the U.S. as a trading partner. In 2024, over 75% of Canada’s domestic exports went to the U.S. The export concentration index was 0.58, showing a high reliance on a few markets.