Canada's August trade deficit widens more than forecast as exports drop

By Promit Mukherjee

OTTAWA, Oct 7 (Reuters) - Canada's merchandise trade deficit widened in August to C$6.32 billion ($4.53 billion) as exports fell faster in both value and volume than the rise in imports on a monthly basis, official government statistics showed on Tuesday.

The trade deficit in August was led by drop in exports not only to its top trading partner the U.S. but also because its shipments to the rest of the world shrank in the month.

Canada's international trade numbers took a beating early this year as U.S. President Donald Trump imposed sectoral tariffs on the country, forcing businesses to reorient supply chain from its biggest trading partner. But the shift has been volatile and erratic.

Analysts polled by Reuters had forecast the August trade deficit at C$5.55 billion, up from a upwardly revised C$3.82 billion in the prior month.

Total exports dropped by 3% while imports increased 0.9%, StatsCan said.

In August, exports to the U.S. were at C$44.18 billion, down 3.4% from July, StatsCan said, adding it was primarily led by unwrought gold exports. But even other product categories contributed to the decline including lumber, machinery and equipment.

Canada's share of exports to the U.S. has been volatile but gradually shrinking. It had fallen below 70% a few months ago before recovering to 73% in August as compared with 75% during the same period last year.

Prime Minister Mark Carney will be meeting with Trump on Tuesday as he comes under pressure to address the impacts of U.S. tariffs on critical sectors such as steel, cars and lumber. But experts have warned against the likelihood of any major deal.

Imports from the U.S. were down 1.4% in August on a monthly basis, shrinking the total trade surplus with its southern neighbor to C$6.43 billion from C$7.42 billion in July.

Exports to countries other than the United States were down 2% in August, a third consecutive monthly decline, Statscan said. Lower exports of crude oil and nuclear fuel contributed the most to the monthly decrease.

However, its imports from the rest of the world barring the U.S. rose 4.2%, reaching a record in August, StatsCan's data showed, pushing Canada's trade deficit with countries other than the United States to a record high of C$12.8 billion in August from C$11.2 billion in July, StatsCan said. (Reporting by Promit Mukherjee; Editing by Dale Smith)