BMO Says Canada's Trade to Remain Under Pressure Amid High Uncertainty

11:24 AM EST, 01/29/2026 (MT Newswires) -- Canada's merchandise trade deficit widened to $2.2 billion in November from a revised $400 million in October, said Bank of Montreal (BMO).

Exports fell 2.8% month over month as gold shipments reversed following two months of strength, although they are still up almost 40% year-to-date. Autos were down 11.6%, weighed by a semiconductor shortage and United States tariffs on medium- and heavy-duty trucks.

On the positive side, energy (+8.5%) rebounded from the previous month's disruptions due to temporary production shutdowns in U.S. refineries, noted the bank.

Meantime, imports edged down 0.1% month over month as the sectors were mixed. Weaker auto production dampened those imports (-4.5%) while a 6.2% increase in volatile consumer goods offset some of the declines.

Amid the 'heated rivalry' with the United States., imports from that country (-5.4%) fell to their lowest level since 2022. In November, 56% of Canadian imports came from the U.S., the lowest share (excluding April 2020) since records began in 1997. On the export side, 68% of Canadian shipments were destined to the U.S. -- slightly higher than in the previous month but still well below historic norms.

In volume terms, exports decreased 3.7% month over month while imports edged up 0.4%. Despite the strong hand-off from net exports to start the quarter, it looks like real gross domestic product will struggle to expand in Q4, stated BMO.

Investors will know more when the monthly GDP figures by industry are released on Friday, including the flash estimate for December growth.

The services trade surplus shrank to its smallest ($11 million) since June, as exports fell 1.7% while imports increased 3.9%. Altogether, Canada's total trade balance deteriorated from a $27 million surplus in October to a $2.2 billion shortfall in November.

Looking through the volatility from energy and metals prices, it is clear that Canadian trade flows remain under pressure as long as uncertainty stays elevated, according to the bank. Despite some support from diversification, trade headwinds will remain until Canada gets certainty in the form of relief on sectoral tariffs and clarity on the future of USMCA.

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