Merchandise Trade April 2025: Exports begin freefall

“Exports are free-falling. Now it’s a matter of whether there’s a cushion or concrete below. Nearly $15 billion in Canadian exports to the U.S. has disappeared since the start of the year — a staggering hit to Canada as a trading nation. As demand for Canadian goods weakens, the trade deficit is set to widen further. Exporters are trying to pivot to new markets, but diversion simply isn’t viable in some key sectors. For the Bank of Canada, the first of many declines in the hard data is here, turning soft guidance into sharp reality.”

Headline

Canadian nominal merchandise exports declined nearly 11%, with imports down 4% in April. This is the first month where U.S. tariffs covered most of the period. Almost all sectors saw declines in both export value and volume. The trade surplus with the U.S. narrowed sharply (the lowest since the end of 2020), bringing the overall trade balance into the largest goods deficit on record, $7.1 billion.

Key Takeaways

• 10 of 11 (except metal ores and minerals) sectors contributed to the decline in April exports. Motor vehicles led the decline (-17%), mainly in reduced passenger vehicles demand. Consumer goods product exports fell 15% due to lower food product exports. Energy products posted the third monthly decline, falling 8% in April. Other sectors impacted were industrial machinery and equipment and forestry products and building materials, down 23% and 19% respectively.
• Merchandise imports were down nearly 4% in April due to lower imports of motor vehicles, industrial machinery and equipment, and consumer goods.
• Shipments to the U.S. fell nearly 16% (%8 billion) in April, the third straight monthly decline and now 26 % below January levels.
• Imports from the U.S. dropped 11%. Canada’s merchandise trade surplus with the U.S. shrank to $3.6 billion—the smallest since December 2020—down from $6.8 billion in March.
• Exports to the rest of the world rose 3%, led by gains to China, the U.K., Algeria and Brazil. From a product perspective, potash, iron ore, gold, agri-food, and other metals were part of the higher numbers.
• Imports from non-U.S. partners jumped 8% to a record $29 billion, lifting two-way trade with these markets to an all-time high of $47 billion. Canada’s goods trade deficit with non-U.S. markets increased to $11 billion in April from $9 billion in March.

Implications

• Exports to the U.S. are likely to continue its record decline as U.S. tariffs test demand for Canadian goods. Already $15 billion in value has been erased since January 2025.
• On the bright side, the share of Canadian imports entering the U.S. under CUSMA rose from 50% in March to 56% in April (from 38% in 2024), a sign that companies are rushing to fill out paperwork to avoid tariffs.
• The second quarter is starting on a much weaker note with overall exports tracking a decline of 10%, if May and June values continue. This is the first weak data point following the Bank’s decision to hold interest rates this week.

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