CIBC Comments on Canada's July Trade Balance

08:47 AM EDT, 09/04/2025 (MT Newswires) -- Canadian exports and the goods trade deficit began to stabilize in July, albeit at weaker levels than prevailed before United States tariffs and related uncertainty took hold, said CIBC on Thursday.

The deficit in goods trade was $4.9 billion, which was around $1 billion narrower than in the prior month and also slimmer than the consensus forecast of $5.3 billion, noted the bank.

Exports increased by 0.9% month over month, and were up by a stronger 1.6% in inflation-adjusted terms. Auto exports rebounded to offset the decline in the prior month, while energy exports also contributed to the overall increase.

Partially offsetting those areas, aluminum exports fell for the fourth consecutive month to their lowest since May 2019. Imports were down by 0.7% in the month (-0.9% in real terms) as inbound shipments of industrial machinery normalised following an outsized increase in June, stated CIBC.

Overall, it looks like net trade will be a positive for GDP in Q3, but that doesn't mean that the negatives from this year's tariff shock are behind Canada, added the bank. Exports in Q2 were likely below the underlying trend, due to earlier tariff front-running, and so the recent improvement is simply returning us to a new, lower, trend level.

In addition, the impact on business investment, hiring and, by extension, consumer spending, will persist for longer and likely keep overall GDP growth fairly tepid during the second half of the year, according to CIBC.

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