Canada's Merchandise Exports to The U.S. Stabilize, Says National Bank

12:28 PM EDT, 09/04/2025 (MT Newswires) -- Canada's merchandise trade deficit narrowed in July, with exports rising for the third consecutive month following April's collapse, said National Bank of Canada.

This increase was partly due to the energy products category, where higher prices and volumes pushed shipments to their highest level in four months ($12.8 billion), noted the bank after Thursday's data.

More specifically, sizeable jumps in exports were noted in the nuclear fuel (+49.7%), coal (+28.6%) and natural gas (+7.8%) sub-segments. International shipments of motor vehicles/parts also did well in the month, something Statistics Canada attributed to less disruptive than usual seasonal maintenance at assembly plants in Canada.

With the United States being the main destination for Canadian energy and motor vehicle exports, it was perhaps unsurprising to see Canadian exports to the U.S. jump 5.0% in July to reach their highest level in four months at $45.1 billion.

This increase could also reflect the fact that, after restraining their purchases and attempting to rely on their inventories while awaiting a possible resolution to trade tensions, some U.S. buyers now have no choice but to restock at a higher cost, contributing to a rebound in Canadian exports, pointed out National Bank.

If this is the case, there is still a long way to go to erase the effects of the trade war, with exports to the U.S remaining down 10.3% over 12 months, added the bank. Not to mention that the decline in shipments isn't yet over in certain sectors directly affected by tariffs.

Aluminum exports to the world, for instance, dropped no less than 31.0% month over month, in July, sinking to their lowest level since May 2019. Since peaking in May 2022, shipments in this segment have fallen by no less than 66.3%.

On the import side, the July decline was largely due to a sharp drop in the industrial machinery/equipment category, as a one-time import in June of a module destined for an oil project off the coast of the island of Newfoundland didn't repeat.

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