Canada’s trade balance moved into a $1.8 billion surplus in March, from a $5.1 billion deficit the prior month.
Exports in March surged by 8.5% month-on-month (m/m) following February’s sturdy gain. Rapidly rising energy prices pushed crude oil exports up 18.9% m/m, while exports of unwrought gold, silver, and platinum rose by a sizeable 37.7% m/m. Meanwhile, exports of motor vehicles and parts (+4.5% m/m) rose again in March as they continued their recovery from January’s depressed level. In total, 7 of 11 product categories registered a gain.
Goods imports decreased by 1.6% m/m in March, paring some of the prior month’s robust 9.4% monthly gain, with 8 of 11 subsectors booking a loss. Consumer goods imports (-3.9% m/m) and imports of aircraft and other transportation equipment (-12.8% m/m) contributed most to the monthly decline.
In volume terms, exports edged lower by 0.3% m/m while imports fell by a larger 2.0% m/m.
Canada’s merchandise trade surplus with the United States widened from $2.9 billion in February to $7.1 billion in March. Exports to non-U.S. destinations rose by a healthy 9.1% m/m, setting a new all-time high.
Key Implications
March’s trade data showed some firming in headline activity, though all of the positive print in exports came from price impacts of higher oil prices. With data up until March in the books, net trade still appears poised to subtract from Q1 2026 real GDP growth, reflecting a broadly stronger quarter for imports. Looking ahead, higher oil prices should meaningfully lift nominal export values into Q2, helping to further improve the trade balance.
The upcoming USMCA renegotiation remains a key near-term risk for Canada. With the July 1st review approaching, renewed engagement between Canadian and U.S. officials is a positive first step, but concrete outcomes remain limited. Our base case continues to assume the agreement stays intact, though elevated uncertainty is likely to restrain business confidence and investment decisions.
