Rising Unwrought Gold Exports Behind the Trade Balance Improvement

Canada’s merchandise exports increased 2.6 per cent (month-over-month) in December 2025. Meanwhile, imports were up 0.6 per cent. As a result, Canada’s merchandise trade deficit narrowed from $2.6 billion in November to $1.3 billion in December.

Key insights

Movements in the Canadian dollar, together with fluctuations in precious metal markets, influenced trade activity in December. Exports of metal and non-metallic mineral products rose 18.0 per cent month-over-month, led primarily by unwrought gold, silver, and platinum, reflecting higher shipments to the United Kingdom, the U.S., and Australia. On a year-over-year basis, exports of these metals and their alloys surged 41.7 per cent in 2025. On the imports side, unwrought gold, silver, and platinum group metal shipments into Canada also increased sharply, rising 53.5 per cent in December. Meanwhile, the Canadian dollar strengthened against the U.S. dollar during the month, which reduced trade values when measured in Canadian dollars. In U.S. dollar terms, Canadian exports and imports were up 4.5 per cent and 2.4 per cent, respectively.

Near-term trade prospects remain uncertain. After a sharp 12.4 per cent decline in exports during the second quarter of 2025, nominal exports rebounded by 2.2 per cent in Q3 and 3.9 per cent in Q4. While these recent quarterly gains point to some resilience amid U.S. tariff pressures, overall exports for the year were down 0.2 per cent. The apparent strength has been largely driven by shipments of unwrought gold, obscuring underlying weakness in core trade flows. When excluding gold and price effects, the trade outlook appears subdued. Downside risks remain elevated given ongoing uncertainty surrounding U.S. trade policy and the softening U.S. economic environment.

Canada looks to shift trade away from the United States. Prime Minister Mark Carney’s visit to China last month resulted in a rollback of tariffs between the two countries, representing a notable shift in trade policy after several years of escalating tensions. Building on recent agreements with partners such as Indonesia and Germany, this development underscores Ottawa’s efforts to broaden trade partnerships and reengage with markets where relations had previously been strained. Rather than relying on a potential breakthrough deal with the United States, which may be out of reach, Canada is actively pursuing diversification of its trade relationships. This strategy will be critical for enhancing the resilience of Canadian trade going forward.

For more details about the impact of U.S. tariffs and our research on Canada’s place in a changing world, please read more here.