TD Says "Solid" December Canada Trade Data Also Signals Volatile Recovery

10:00 AM EST, 02/19/2026 (MT Newswires) -- Canada's trade deficit was slashed in half in December, narrowing from $2.6 billion in November to $1.3 billion in December, said TD.

Exports in December advanced 2.6% month over month, partially recovering last month's dip. In line with recent trends, exports of unwrought gold, silver and platinum groups contributed most to the increase, jumping by 18% month over month, noted the bank after Tuesday's data release.

Exports of aircraft (+26% month over month) also contributed meaningfully. Outside of this, seven of 11 product categories registered a decrease in the month. Stripping out the impacts of Canadian dollar appreciation, exports rose by a more robust 4.5% month over month.

Goods imports edged higher by 0.6% month over month in December, with six of 11 subsectors booking gains. Imports of motor vehicles and parts (+5.1% month over month) reversed last month's drop, while imports of metal and non-metallic mineral products (+7.7% month over month) contributed to the gain. Consumer goods (-4.5%) offset the total import increase.

In volume terms, both merchandise exports and imports were up 1.4% month over month.

Canada's merchandise trade surplus with the United States narrowed from $6.5 billion in November to $5.7 billion in December. Exports to non-U.S. destinations rose by 5.8% month over month, reaching an all-time high.

This was a "solid" print for Canadian trade to cap off 2025, stated TD. However, the details confirm that the recovery in trade since early last year has been volatile and uneven, particularly with product categories like precious metals experiencing substantial month-to-month swings.

All told, exports outpaced imports in Q4, which should act as a tailwind to Q4 real gross domestic product growth, added the bank.

The upcoming CUSMA trade deal review will be in full focus over the coming months. While the base case is that the agreement remains in place, scenarios involving U.S. withdrawal could expose Canadian exporters to significantly higher tariffs and prolonged policy uncertainty, weighing on business confidence and investment. The pending U.S. Supreme Court ruling on the legality of IEEPA tariffs could also affect potential outcomes, according to the bank.

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