Canada swings to trade surplus for first time in six months

Canada’s posted its first trade surplus in six months, but economists warn that the volatility in oil prices may affect these numbers in the future.

A strong increase in exports and a decrease in imports resulted in a $1.8 billion trade surplus in March, the first since September 2025.

The data, published by Statistics Canada on Tuesday, showed total exports rose 8.5 per cent to $72.8 billion in March, the highest level since January 2025. It came after the Canadian economy sank into a $5.1 billion trade deficit in February, the largest on record since August 2025.

The jump was driven primarily by exports of metallic and non-metallic mineral products, which increased by 24 per cent to a record $15.3 billion. Exports of precious metals (gold, silver, platinum) contributed the most to the monthly change in this category — up 37.7 per cent to $3 billion — driven by an increase in gold shipments to the United Kingdom. StatsCan noted that the growth in gold exports occurred as gold prices fell during the month.

Oil exports also contributed to the jump, growing by around 15.6 per cent to $17.1 billion in March — the highest level since September 2022 — due to a sudden increase in crude prices caused by the war in Iran.

Several other products also contributed to the overall increase in exports, including motor vehicles and parts, reflecting an increase in auto production in Canada.

Total imports fell by 1.6 per cent in March after reaching a record high in February, driven by a decrease of consumer goods and aircraft and other transportation equipment.

BMO Capital Markets senior economist Shelly Kaushik said in an interview that the surplus was better than markets expected, but not “super surprising, just given the upswing in oil prices and energy prices more broadly.”

“It’s pretty clear based on these numbers — without trying to put too much emphasis on one month — that Canada does have a relative advantage, given that it is a major energy supplier.”

Kaushik warned, however, that because the surplus is tied to volatile commodities, the numbers can change dramatically in a short time. Depending on when the Strait of Hormuz is reopened and energy infrastructure is rebuilt in the Middle East, Canadian crude oil exports could “come back down to earth,” she said.

The Bank of Canada also expects global oil prices to decline in the long-term, according to its latest Monetary Policy Report.

“The speed at which oil prices actually come back down, if they ever do come back down to pre-war levels, is the main question here … We’re likely to see at least less support from those higher prices as soon as we get some resolution to the war,” Kaushik said.

Canada’s trade surplus with the United States also widened by 8.3 per cent to $7.1 billion in March — the highest level since September 2025 — due to higher exports of crude oil, passenger cars and light trucks.

Desjardins economist LJ Valencia said uncertainty surrounding the upcoming Canada-U.S.-Mexico Agreement (CUSMA) review will add volatility to trade numbers in the near term.

“A lot of businesses and a lot of people have plenty of questions as to what the outcomes may look like. It’s hard for exporters and businesses to plan things ahead of time,” he said in an interview.

“If things turn south and we get a no-deal scenario, the economy ends up with a much lower growth trajectory.”

Despite the strong showing in March, Statistics Canada said the first-quarter merchandise trade deficit widened from $4.2 billion in 2025 to $6.5 billion in 2026. Total imports rose by 4.6 per cent year-over-year in the first quarter of 2026, while total exports were up 3.5 per cent.

“Overall, the (first quarter) trade numbers will still be a drag to overall real GDP as reflected in our expectations,” Valencia said.

• Email: ptran@postmedia.com