Trade Deficit Widens to $5.9 billion in June

Key Insights

June saw a modest rise in exports, but tariff headwinds dragged down broader second-quarter trade performance. Following a record-low national trade balance in April—coinciding with the implementation of U.S. tariffs on Canadian imports—exports showed signs of recovery in May and June, rising by 2.0 per cent and 0.9 per cent, respectively. The data underscores the strategic value of diversifying Canada’s export destinations, with year-over-year exports to non-U.S. markets up 14.7 per cent in June. However, June’s growth was largely price-driven, as export volumes declined. For the second quarter overall, exports fell 12.8 per cent compared to the first quarter, weighed down by sharp declines in energy products, motor vehicles and parts, and consumer goods—largely due to tariff-related pressures.

Imports rose for the first time in four months. The increase was due in large part to a sharp rise in imports of industrial machinery, equipment and parts. In June, there was a $2.0 billion increase in imports in the logging, construction, mining, and oil and gas field machinery and equipment product groups. However, excluding the industrial machinery, equipment and parts product group, total imports were down 1.9 per cent.

The near-term trade outlook remains uncertain amid escalating U.S. tariffs. Canada’s trade outlook remains clouded by rising uncertainty, intensified by U.S. President Donald Trump’s August 1st decision to raise tariffs on Canadian goods to 35 per cent. While the tariff applies only to non-CUSMA-compliant products, the broader unpredictability of U.S. trade policy is eroding business confidence and fueling market volatility. In the months ahead, the trajectory of Canada’s economic growth will depend on how the Canada–U.S. trade relationship evolves. Reaching a deal would provide much-needed clarity for businesses and consumers alike.

For a more detailed breakdown, check out our analysis on The True Cost of the Trump Tariffs.