Canada Narrows May Trade Gap to C$5.9 Billion as Gold Exports Surge

Canada’s merchandise trade deficit narrowed to C$5.9 billion (US$4.3 billion) in May, retreating from April’s record C$7.6 billion, Statistics Canada said. The improvement came as total exports rose 1.1 % to C$60.8 billion while imports fell 1.6 % to C$66.7 billion. May marked the first increase in exports in four months. A 30.1 % jump in shipments of unwrought gold, largely to the United Kingdom, lifted metal and non-metallic mineral exports 15.1 %, offsetting weaker sales of autos, energy and farm goods. Exports to the United States, Canada’s largest trading partner, fell 0.9 % for a fourth consecutive monthly decline, reaching their lowest level outside the pandemic year of 2020. Auto, steel and aluminum flows continued to be curbed by U.S. tariffs of up to 50 %, and Canada’s retaliatory levies. Imports from the United States slid 1.2 %. Canadian firms redirected shipments elsewhere, with exports to markets other than the U.S. climbing 5.7 % to a record high, highlighting a gradual diversification of trade. Economists said the still-elevated deficit means net trade is likely to weigh on second-quarter GDP even as the headline gap narrows. Following the release, the Canadian dollar weakened 0.23 % to C$1.3615 per U.S. dollar, while two-year Government of Canada bond yields rose about four basis points to 2.71 %.