Canadian exports hit all-time high in April as trade gap narrows to 6-month low

Canada's exports hit an all-time high in April, helping to narrow the country's overall trade deficit with the rest of the world to a six-month low, Statistics Canada reported Wednesday.

The federal government agency said Canada's exports increased 1.6 per cent to a record $48.6 billion in April, marking a sixth increase over the past seven months.

Exports of metal and non-metallic mineral products, consumer goods and energy products were up in April, partially offsetting lower exports of aircraft and other transportation equipment and parts.

Year over year, total exports were ahead by 3.1 per cent

Conversely, Canadian imports slipped 2.5 per cent in April to $50.5 billion after reaching a record high in March. Statistics Canada said lower imports of motor vehicles and parts and consumer goods outweighed higher imports of energy products. 

Canada's overall trade gap narrowed from $3.9 billion in March to $1.9 billion in April. That was better than the $3.4-billion deficit for April that economists surveyed by Bloomberg had been expecting.

Surplus with U.S. grows

Exports to the United States — Canada's top trading partner — were up 3.2 per cent to $36.1 billion in April, on higher shipments of crude oil and crude oil bitumen, while imports from the United States fell by 1.4 per cent to $32.5 billion, mainly due to lower imports of passenger cars and light trucks.

Consequently, after five monthly contractions, Canada's merchandise trade surplus with the United States widened to $3.6 billion in April from a $2.0 billion surplus in March.

BMO economist Benjamin Reitzes said the April figures suggest trade could give a substantial boost to Canadian economic growth and "break a five-quarter streak of trade subtracting from GDP, the longest since the mid-1970s."

"Canada's trade picture perked up to start Q2, consistent with expectations that growth is going to bounce back after a soft start to the year," Reitzes said.

"While there's still tons of room for improvement on the trade front, this is welcome news and consistent with the Bank of Canada hiking rates at the July policy meeting."

Duelling tariffs

In its monthly trade report, Statistics Canada also laid out the value of the products subject to a tariffs recently announced by Canada and the United States.

On June 1, the U.S. imposed tariffs on some Canadian steel and aluminum products of 25 per cent and 10 per cent, respectively. According to Statistics Canada's data, in 2017, the export value of aluminum products that are subject to the 10 per cent rate was $9.2 billion, while the value of steel exports subject to the 25 per cent rate was $7.2 billion.

At the same time, Canada has proposed additional tariffs on the imports of a broad range of products from the United States. In 2017, the import value of the U.S. goods that may be subject to the proposed tariffs was $19.4 billion.

'Rough ride'

Despite April's good report, TD senior economist Michael Dolega suggested Canadian exporters are in for a "rough ride" in the coming months, and perhaps quarters.

"The recently imposed tariffs on aluminum and steel, together with retaliatory Canadian tariffs, will likely hold back movement of metals and metal products across the border and be a drag on economic activity — particularly in Quebec and Ontario," Dolega said in a commentary.

"The tariffs also throw a wrench into the already difficult NAFTA negotiations, with any agreement looking less likely over the near-term — something that's not going to do anything for business confidence on either side of the border."