National Bank Says Disruptions in The Auto Sector Cause A Widening of The Trade Deficit in January

12:27 PM EDT, 03/12/2026 (MT Newswires) -- Canada's merchandise trade deficit expanded much more than economists expected in January and it was the widest in five months, said National Bank of Canada.

This surprise was largely due to temporary disruptions in the automotive industry, which led to the largest decline in nominal exports since April 2025, noted the bank. Changes in production models indeed led to longer-than-usual maintenance shutdowns at some auto plants, causing exports of passenger cars and light trucks to contract at the fastest rate since the pandemic (-32.5%).

At $2.7 billion, international shipments in this category were the lowest since September 2021, pointed out National Bank.

With the United States being the main destination for Canada's automotive exports, the bank might have expected Canada's trade surplus with the U.S. to shrink more than it did, but the loss was partially offset by a 23.7% increase in the country's natural gas exports.

National Bank recalled that the U.S. experienced an unusually cold January, which contributed to increased demand and prices in this segment.

The drop in total exports during the month also reflected an 8.0% decline in the metal and non-metallic mineral products segment. More specifically, shipments of unwrought gold, silver, and platinum group metals retraced 12.6%.

However, as this decline followed a significant increase in the previous month, exports in this segment were still up 27.0% on a 12-month basis, a development that reflects a sharp rise in prices over this period.

Lower imports, meanwhile, partly reflected a drop in the automotive segment, for the same reasons mentioned earlier, but also a decline in the electronics category that Statistics Canada attributed to reduced imports of smartphones from China amid a semiconductor shortage.

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