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Strong Trade Performance Despite External Headwinds

Canadian Economics

By: David Ristovski

    

Canada’s merchandise exports rose 0.4 per cent in June. Meanwhile, imports were up 0.2 per cent. As a result, Canada’s merchandise trade surplus widened from $3.7 billion in May to $3.9 billion in June.

  • Exports rose to a record $77.5 billion in June. Gains were recorded in 6 of 11 product categories. Exports of metal and non-metallic mineral products (+16.5 per cent) contributed most to the overall monthly increase. Meanwhile, exports of energy products posted the most significant decline of 10.0 per cent, offsetting some of the gains. In volume terms, exports were up 1.1 per cent in June.
  • Imports rose to $73.6 billion in June, with increases recorded in 2 of 11 product categories. The main contributor to the monthly gain was imports of electronic and electrical equipment and parts (+11.7 per cent). Several product sections posted notable decreases, which moderated import growth this month. These product sections included industrial machinery, equipment and parts (–3.3 per cent), and consumer goods (–1.3 per cent). In volume terms, total imports fell 1.5 per cent.
  • Canadian exports to the U.S. rose 0.3 per cent in June. Meanwhile, imports from the United States were up 3.0 per cent. As a result, the merchandise trade surplus with the United States narrowed from $11.1 billion in May to $10.0 billion in June.

Key insights

Canadian trade demonstrated strong growth in the second quarter of 2026. Total exports increased 13.1 per cent, the strongest quarterly increase since the third quarter of 2020. Growth was led by higher energy exports, reflecting elevated prices amid the conflict in the Middle East, alongside a rebound in motor vehicle and parts exports, which rose 19.3 per cent after two consecutive quarterly declines. Total imports also increased 4.2 per cent, supported by stronger imports of chemicals, plastics and rubber products, motor vehicles and parts, and electronic and electrical equipment, while lower imports of metal and non-metallic mineral products partially offset these gains. Adjusted for price effects, exports increased 5.4 per cent, compared with a 1.4 per cent rise in imports, highlighting continued strength in Canada’s trade performance.

The strength in second-quarter trade activity comes amid a more uncertain external environment. Ongoing geopolitical tensions, including hostilities between the United States and Iran, continue to pose risks to global energy markets and supply chains, contributing to price volatility. At the same time, uncertainty surrounding the Canada–U.S. trade relationship has intensified following the United States’ decision not to extend CUSMA on July 1 and proposed tariffs of up to 50 per cent on a broad range of Canadian exports, with some measures scheduled to take effect on August 19. While these developments present challenges for the outlook, Canada’s recent trade performance highlights the resilience of its export sector in navigating a complex global environment.

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