Merchandise Trade May 2025: Headline rebound masks underlying softness

Exports found a lifeline in May, sustained by a sharp surge in gold shipments that drove the first monthly export increase in four months. Yet, beneath this headline gain, most other sectors continued to show weakness, and exports to the United States declined for a fourth consecutive month. While the trade deficit narrowed from April’s record level, the share of Canadian exports destined for the U.S. fell to one of the lowest proportions on record, underscoring ongoing challenges in adapting to the U.S. tariff environment. Growth in non-U.S. markets offered some relief, but overall, the trade outlook remains subdued amid a volatile and shifting global landscape.

Headline

Canada’s merchandise exports rose 1.1% in May, largely driven by a record surge in gold exports, while imports fell 1.6%, and the overall trade deficit narrowed from $7.6 billion in April to $5.9 billion in May. Yet, excluding metal and non-metallic mineral products—principally unwrought gold—exports declined 1.2%, and energy sales dropped fell 5.6%. Exports to the United States fell again (-0.9%), cutting the U.S. share of Canadian exports to just 68%, while exports to non-U.S. destinations hit a record, led by gold shipments to the United Kingdom and crude oil to Singapore.

Key Takeaways

• The 1.1% monthly increase in exports was almost entirely due to a 30% jump in unwrought gold shipments, which hit a record $5.9 billion, primarily to the United Kingdom.
• 7 of 11 sectors increased in May. Consumer goods exports rose 2.6% (meat products +13%, seafood +53%) but remain 19% below January’s peak. Energy exports fell for a fourth month (-6%, led by crude oil -4%). Other sectors like farm products (-5%), chemicals (-3%), and forestry (+0.1%) showed modest changes.
• Imports declined 1.6% in May, marking the third monthly drop. Metal and non-metallic mineral imports plunged 17% (led by unwrought gold -43%). Motor vehicles and parts imports fell another 5%—to the lowest level in over two years—with ongoing effects from reciprocal Canada-U.S. tariffs. Consumer goods imports bucked the trend (+4%), driven by video game consoles and pharmaceuticals.
• Exports to the U.S. were down 0.9%—the fourth consecutive drop and now 16% lower year-over-year. The U.S. share of Canadian exports is at 68%, down from 76% in 2024. Imports from the U.S. also fell 1.2%. The trade surplus with the U.S. inched up to $3.2 billion but remains far below historic norms.
• Non-U.S. exports rose 6% to a record high, but gains were heavily concentrated in a few products and destinations (gold to the U.K., crude oil to Singapore, aluminum and pharmaceuticals to Italy). Imports from these partners fell 2%. The overall two-way trade with non-U.S. countries hit a new high of $47.6 billion.
• Combined trade in goods and services leaves Canada with a $6.6 billion deficit for May, down from $8 billion in April.

Implications

• Canada’s export engine is running on fewer cylinders, with gold masking broader weakness raising questions about the durability of the export rebound.
• Bright spots are emerging in non-U.S. trade, with record gains in Europe and Asia. However, these gains are concentrated and may not offset structural losses with the U.S.
• With another month of soft data following the Bank of Canada’s recent hold on interest rates, second quarter trade is tracking weaker than anticipated. Policy watchers should expect ongoing headwinds and volatility for the remainder of 2025.

Sources: Statistics Canada; Canadian Chamber of Commerce Business Data Lab