RBC Says Canada's Trade Deficit Widens in January on Export Weakness

11:38 AM EDT, 03/12/2026 (MT Newswires) -- Canada's merchandise trade deficit widened to $3.6 billion in January from $1.3 billion in December, as exports and imports fell by 4.7% month over month and 1.1% month over month, respectively, said RBC.

Monthly trade flows continue to show considerable volatility tied to swings in precious metals shipments and non-tariff related disruptions to motor-vehicle trade, noted the bank.

While the headline balance deteriorated in January, at least part of the decline will likely be retraced in February, and higher energy prices due to the conflict in the Middle East will add to Canadian net exports in March, RBC said.

Trade activity early in 2026 is also unfolding against a relatively more stable trade policy backdrop. By the bank's count, 89.5% of exports were duty-free to the United States in January, up slightly from 89.2% in December.

In February the U.S. Supreme Court ruling striking down IEEPA tariffs reinforces this dynamic, added RBC. While the average effective rate for Canada should not change much given existing CUSMA exemptions, the average for all U.S. imports will likely be slightly lower.

Net trade is currently tracking a subtraction from Q1 gross domestic product growth, though monthly trade data remains heavily influenced by episodic shipments of products like gold, motor vehicles, and aircraft, the bank pointed out.

Still, labor markets have shown signs of per-person improvement with the unemployment rate edging lower in recent months and domestic demand has continued to grow on balance, according to RBC.

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