Canada’s merchandise trade deficit widened in June to C$5.9 billion ($4.24 billion) as imports grew faster than exports, driven by a one-time entry of high-value oil equipment, data showed Tuesday.
The June deficit was the second-highest on record, after April’s largest ever deficit of C$7.6 billion. Analysts polled by Reuters had expected the deficit to widen to C$6.3 billion in June from C$5.5 billion in May (which was revised down).
Total imports rose 1.4% to C$67.6 billion in June after falling 1.6% in the previous month, Statistics Canada said. However, if an exception is made for one-time entries of oil products from the U.S. for offshore oil projects, total imports actually fell 1.9% in the month.
Overall exports rose 0.9% to C$61.74 billion after rising 2% in May, marking two consecutive months of increases. The increase was driven primarily by a surge in the value of crude oil exports due to geopolitical tensions in the Middle East. However, in volume terms, exports fell 0.4% in June.
U.S. President Donald Trump raised tariffs on Canada from 25% to 35% starting this month on goods that do not comply with the free trade agreement. Canada also faces tariffs on several other sectors including steel, aluminum and automotive, which have eroded its traditional trade surplus with the U.S.
Exports to the U.S. rose 3.1% in June on crude oil shipments, but were still 12.5% lower year-on-year. By contrast, exports to countries other than the U.S. fell 4.1%, the first decline since February after hitting a record high in May.
The increase in overall imports in June was driven by a 2.6% increase in imports from the U.S. due to shipments of offshore oil modules. This was the first increase after three consecutive months of declines in imports.
Following the data, the Canadian dollar weakened slightly, down 0.2% to 1.3804 against the U.S. dollar (equivalent to 72.44 U.S. cents), while the two-year government bond yield rose 0.6 basis points to 2.703%.
