Canada's Trade Deficit Widens to $5.7 Billion as Gold Drives Record Imports
Canada's trade deficit expanded significantly in February, reaching $5.7 billion, which marks the largest shortfall since August. This widening gap was primarily driven by imports hitting a record high, largely due to increased purchases of gold and other precious metals.
Key Trade Statistics for February
According to Statistics Canada, the country's trade activity showed notable growth in February. Imports rose by 8.4 percent, while exports increased by 6.4 percent. In volume terms, total imports grew by 7.1 percent, and total exports expanded by 4.8 percent.
The federal agency also revised its January trade data, indicating a larger trade deficit of $4.2 billion for that month. Economists surveyed by Bloomberg had anticipated a February deficit of $2.5 billion, making the actual $5.7 billion figure deeper than any estimate and ranking among the largest on record.
Gold and Precious Metals Drive Import Surge
Imports of metal and non-metallic minerals skyrocketed by 45.6 percent in February, with higher purchases of gold from the United States being a key factor. Additionally, imports of waste and scrap metal more than doubled, rising by 108 percent, driven by increased imports of gold waste and scrap from the U.S.
Excluding precious metals, the trade deficit would have been even larger at $10.3 billion, highlighting the significant impact of gold on the overall trade figures.
U.S. Trade Dynamics and Global Context
Overall imports from the United States surged by 13.6 percent, reaching their highest level since March 2025, when tariffs first came into effect. This increase was fueled by higher imports of gold and automotive products.
Exports to the U.S. grew to a lesser extent, rising by 4.4 percent, primarily due to increased shipments of passenger cars and light trucks. After work stoppages hampered auto production in January, exports of motor vehicles and parts rebounded strongly, increasing by 24.2 percent in February.
As a result, Canada's trade surplus with the U.S. narrowed to $1.7 billion from $4.9 billion in January, marking the smallest surplus since May 2020.
Trade with Non-U.S. Countries and Economic Outlook
Trade with countries other than the United States also reached a record high in February, with gold playing a role in this increase as well. Exports to these countries rose by 10.5 percent, while imports increased by 1.6 percent.
Consequently, Canada's trade deficit with non-U.S. countries narrowed to $7.5 billion, down from $9.1 billion in January.
Andrew Grantham, a senior economist at Canadian Imperial Bank of Commerce, noted in a report to investors that while net trade is likely to negatively impact first-quarter GDP due to the import surge, this could also indicate restocking following inventory drawdowns that dragged on GDP in the previous quarter.
The February data provides a snapshot of Canada's trade activity ahead of potential global disruptions, such as the Iran war and oil price shocks, which are expected to affect the March report.
