Canada's Trade Deficit Shrinks in May as Exports to U.S. Decline Again

Canada’s trade deficit with the world narrowed in May from a record high the previous month, as tariffs continued to weigh on exports to the United States. Statistics Canada reported that the trade deficit fell to $5.9 billion from $7.6 billion. Exports to the United States decreased by 0.9%, marking the fourth consecutive month of decline due to punishing tariffs imposed by the White House on certain sectors of the Canadian economy, including steel, aluminum, and automobiles.

The impact of U.S. tariffs is evident in the automotive sector, with trade slowing down in both directions. Imports of motor vehicles and parts fell by 5.3%, while passenger vehicles and light trucks imports dropped by 9.7% in May. On the other hand, exports to countries other than the U.S. increased by 5.7%, reaching a record high. Gold exports saw a significant rise, contributing to a 1.1% increase in total exports.

Prime Minister Mark Carney is working to negotiate an economic and security agreement with the United States by July 21 to secure relief from tariffs for Canadian businesses. Talks were briefly halted last week over Canada’s digital services tax targeting tech giants, but have since resumed after the tax was rescinded by the federal government.

According to the source: The Globe and Mail.