Energy, Gold Exports Offset US Tariff Impact on Canada

Canada’s trade surplus with all countries widened to C$5.35 billion ($3.8 billion) in September, as higher energy and gold exports to the US appeared to offset the impact of new tariffs.

Exports declined in 8 out of 11 product sections even as total exports edged up by 0.2%, Statistics Canada reported on Wednesday. Excluding energy and metal and non-metallic mineral products, exports fell by 5.6%. Total exports also decreased by 4% in volume terms, the largest percentage decline since January.

The report provides the first full month of trade data since the US imposed so-called Section 338 tariffs on $20 billion of Canadian goods in late August. The Trump administration has recently made some adjustments to those levies.

Canada and the US are set to resume trade talks, according to Prime Minister Mark Carney who said Sunday that both sides would work on a “mutually beneficial”outcome in the weeks ahead.

“Overall, the September decline in export volumes does show a significant hit to the Canadian economy from new US tariffs, and highlights the importance of renewed trade talks in reducing or eliminating existing tariffs,” Canadian Imperial Bank of Commerce senior economist Andrew Grantham said in a note to investors.

Exports to the US increased in September by 0.7%, mainly on higher exports of crude oil and unwrought gold, while imports grew by 0.4% partly on higher shipments of processing units. That widened Canada’s trade surplus with the US slightly to C$12.3 billion from C$12.1 billion.

Canada’s trade surplus for August was also revised up to C$4.95 billion from C$4.2 billion. Economists surveyed by Bloomberg had expected the country’s trade surplus was C$5 billion in September.

Energy exports increased by 8.2%, as higher prices drove up shipments of crude oil and bitumen. Exports of metal and non-metallic mineral products also grew by 8.6%, driven by higher purchases of Canadian-held gold by US residents.

Meanwhile, total imports decreased by 0.3%, with motor vehicles and parts posting the largest decline, falling by 9.1% as supply issues caused unplanned work stoppages in the US. Excluding that product section, imports increased by 1.5%. Total imports also declined by 2.5% in volume terms.

Exports to countries other than the US fell by 1.1% in September, marking the second consecutive decline after reaching a record high in July. Lower exports of gold to the UK, coal and wheat to Japan as well as diesel and wheat to Peru were partially offset by higher exports of copper, coal and crude oil to South Korea.

Imports from countries other than the US also decreased by 1.4%, amid lower imports from China, Japan and Mexico, mainly driven by passenger vehicles and light trucks.

As a result, Canada’s trade surplus with countries other than the US narrowed slightly to C$7 billion from C$7.1 billion.