Canada’s trade balance shifted to a surplus in March driven by a rise in crude oil prices and strong demand for gold, leading to a notable increase in exports while imports decreased, according to data released on Tuesday. Statistics Canada reported a surplus of $1.78 billion for March, a significant turnaround from the $5.11 billion deficit in the previous month. This marked the first surplus in six months, mainly attributed to the surge in crude oil prices due to the conflict in Iran, boosting export values from Canada. Although gold prices declined in March, the global demand for the precious metal contributed to further export growth.
Analysts surveyed by Reuters had anticipated a deficit of $2.88 billion, making the actual surplus a positive surprise. Total exports surged by 8.5% to $72.8 billion, with a remarkable 24% increase in the metal and non-metallic product export category, reaching a new record high. Energy exports also saw a significant uptick of 15.6%, marking the highest level since September 2022, as reported by StatsCan.
Excluding the aforementioned categories, Canada’s exports experienced a modest 1.1% increase in value but declined by 0.3% in volume. Following a substantial 24.9% growth in February, exports of motor vehicles and parts continued to rise, increasing by 4.5% in March, according to the statistics agency.
The share of exports destined for the U.S. declined despite the higher crude oil prices and increased shipments of passenger cars and light trucks. Canada’s exports to the U.S. rose by 8.3% to $48.51 billion in March, hitting a one-year high, while imports from the U.S. decreased by 1.2% to $41.44 billion. The trade surplus with the U.S. reached $7.1 billion, the highest in six months, while the share of exports to the U.S. dropped to a historic low of 66.7%. This decrease is attributed to the ongoing trade tensions with the U.S., including the imposition of tariffs by President Donald Trump aimed at reducing the trade deficit.
Meanwhile, Canada’s exports to countries other than the U.S. reached a new peak in March, with a 9.1% increase, while imports from non-U.S. countries dropped by 2.2%. Following the release of the trade data, the Canadian dollar experienced a slight increase of 0.03% to 1.3620. Market expectations include the likelihood of two 25 basis point rate cuts by the Bank of Canada by the year’s end.
