Canada’stradedeficitnarrowed inJulyas overall exports rose, especially driven by outbound shipments of crude oil and passenger cars to its biggest trading partner the United States, Statistics Canada said on Thursday.
Its merchandisetradedeficit, ordeficitfrom trading in goods, inJulywas at C$4.94 billion ($3.57 billion), smaller than last month’s C$5.98 billion, but much higher than the same period last year, according to StatisticsCanada’sdata.
Analysts polled by Reuters had forecast thetradedeficitforJulyat C$4.75 billion.
This was the sixth consecutivetradedeficitsince the U.S. President Donald Trump imposed tariffs on Canada, but it has been improving from an all-time recorddeficitof C$7.6 billion observed in April.
Trump’s threats and subsequent tariffs on imports from Canada has forced many businesses to alter their supply chains and seek markets elsewhere. This has disturbed thetradebalance between the two countries pushing Canada into atradedeficit.
But exports to the U.S., which was the destination for 76% ofCanada’stotal goods exports last year, have been on an upswing for the last three months on a monthly basis.
Canada’sexported more crude oil and passenger cars to the U.S. inJuly, pushing its exports up 5%. But on a year-on-year basis, exports south of the border were still down over 10%.
However, imports from the U.S. continued to fall and dropped 2.2% inJuly, taking itstradesurplus with the U.S. by over 80% to C$6.7 billion inJuly, its highest since March.
The Canadian dollarCAD=was trading down 0.21% to 1.3823 to the U.S. dollar, or 72.34 U.S. cents, after thetradedata was released. Bond yields on the government’s two-year bondsCA2YT=RRimproved and were down 0.1 basis point at 2.61%.
The recent GDP data which showed that the economy contracted by 1.6% has led money markets to bet that a rate cut in September is coming. Markets are now betting on an almost 70% chance of a rate cut on Sept. 17.
Overall exports rose by 0.9% to C$61.86 billion inJulywhile imports slowed 0.7% to C$66.80 billion, StatsCan said.
Exports of energy products posted the biggest increase inJulyof 4.2% and exports of motor vehicle sand parts increased 6.6%, it said, adding that lower exports of metal and non-metallic mineral products partially offset the overall increase in exports inJuly.
Exports of aluminum, which has a 50% tariff from the U.S., dropped over 30% inJuly. Steel exports, although marginally down inJuly, were down over 25% year-to-date.
Exports to countries other than the United States were down 8.6% inJuly, a second consecutive monthly decline and imports from countries excluding the U.S. increased 1.3%.
(Reuters)
