Canada’s merchandise trade deficit narrowed to CAD 4.94 billion in July 2025, down from a revised CAD 5.98 billion in June, according to data released by Statistics Canada. The improvement was driven by higher exports, particularly to the United States, and a decline in overall imports. Total exports rose 0.9 percent in July to CAD 61.86 billion, while imports declined 0.7 percent to CAD 66.80 billion. The increase in exports was led by energy products and motor vehicles, offset partially by lower shipments of metal and non-metallic mineral products.
Exports of energy products rose 4.2 percent, while exports of motor vehicles and parts increased by 6.6 percent compared to the previous month. Shipments to the United States, Canada’s largest trading partner, increased 5 percent in July. This growth was primarily attributed to stronger crude oil and passenger vehicle exports. Imports from the United States fell 2.2 percent during the same period. These shifts widened Canada’s trade surplus with the United States to CAD 6.7 billion, the largest monthly surplus since March 2025.
Trade with countries other than the United States showed contrasting trends. Exports to non-U.S. destinations dropped 8.6 percent, marking the second consecutive monthly decline. Key decreases were recorded in exports to the UK, primarily in unwrought gold, and to the Netherlands and Spain. Meanwhile, imports from non-U.S. countries rose 1.3 percent, pushing the trade deficit with those partners from CAD 9.7 billion in June to CAD 11.7 billion in July.
On a volume basis, merchandise exports rose 1.6 percent in July, while import volumes declined 0.9 percent. This suggests that changes in trade were influenced by quantities rather than price movements. Imports of industrial machinery, equipment, and parts saw a sharp monthly decrease of 18.8 percent, weighing heavily on total import values. Other categories such as consumer goods and electronic equipment posted moderate gains.
Gold and aluminum shipments decline in July
In the services sector, exports rose 2.6 percent to CAD 18.7 billion in July, while imports declined 1.3 percent to CAD 18.2 billion. The resulting services trade surplus contributed to a narrowing of the overall international trade deficit. Combining goods and services, total exports rose to CAD 80.6 billion in July, a 1.3 percent increase from June. Total imports, meanwhile, decreased 0.9 percent to CAD 85.0 billion. The combined international trade deficit stood at CAD 4.4 billion in July, compared to CAD 6.2 billion in the previous month.
Despite the improvement, July’s merchandise trade deficit remained higher than the CAD 3.9 billion recorded in July 2024. Analysts surveyed by media had projected a narrower gap of CAD 4.75 billion for the month, indicating that the shortfall was larger than expected even with the positive movement in key export categories. The July trade figures reflect a shift in Canada’s trade dynamics, with stronger performance in U.S.-bound goods offsetting weaker activity in other markets. The data comes amid ongoing fluctuations in global demand and commodity prices that continue to shape Canada’s trade balance. – By Content Syndication Services.