TD Says Net Trade May Pose a "Slight Headwind" To GDP in Q4, Based on October Data

09:43 AM EST, 01/08/2026 (MT Newswires) -- Trade data for the month of October continues to show a modest recovery in Canadian export activity, with some caveats, TD Economics said Thursday, while noting the data has been subject to pronounced volatility in both imports and exports of unwrought gold, which has muddied the overall trend in trade.

"After a solid contribution to gross domestic product in Q3, net trade may pose a slight headwind to growth as import volumes outpaced exports," TD said.

TD Economics continues to believe the peak negative impacts from U.S. tariffs are in the rearview mirror especially as consumers and businesses adopt to the new normal. The path forward is still subject to "significant risk", notably the upcoming and complex review of the USMCA trade agreement, it said.

TD noted the U.S. Supreme Court is also set to rule, possibly as early as Friday, on whether the U.S. administration's use of IEEPA tariffs is lawful. "The jury is out on what the decision will be, but it may have implications for upcoming negotiations," the bank added.

On today's data, TD noted Canada's trade position with the world flipped from a revised $243 million surplus in September to a $583 million deficit in October. Within that, it noted exports in October edged forward for a second consecutive month, or 2.1% month on month. The increase was almost entirely driven by a 47.4% month-over-month rise in unwrought gold, silver and platinum metals. Excluding this category, total exports were down 2.5% month over month, with six of 11 subsectors registering contractions on the month. Exports to the United States. (-3.4% month over month) were offset by shipments to non-U.S. markets (+15.6%).

TD also noted goods imports rose by 3.4% month over month in October, with eight of 11 subsectors booking a gain. Imports of electronic and electrical equipment (+10.2% month over month) led the way, with imports of metal and non-metallic markets (+9.5%) and industrial machinery and equipment (+5.7%) providing an assist.

In volume terms, merchandise exports were down 0.4% month over month while imports increased by 2.6% onth over month.

Canada's merchandise trade surplus with the U.S. narrowed from $8.4 billion in September to $4.8 billion in October.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.