Canada's Goods Trade Deficit Could Narrow To $3 Billion in February, says BMO

07:32 AM EDT, 04/02/2026 (MT Newswires) -- In Canada, the goods trade deficit could narrow to C$3.0 billion in February, according to BMO Economics in its morning note for this Thursday, ahead of trade data due out at 8.30am ET.

BMO says: "Energy exports could step back as natural gas prices came back down to earth after January's deep freeze across parts of North America. Exports of precious metals look to stay elevated as gold prices nudged higher. And, auto production will likely start to recover from the previous month's slowdown. The latter is reflected in a solid manufacturing flash estimate and should also point to strength in imports. Looking ahead, the trade balance will be supported by the energy price spike, although greater uncertainty will weigh on non-energy demand."

BMO says tariffs remain a key risk as USMCA negotiations continue, and as Canada is on the expanded 60-country list for investigations into forced labour practices. It notes a report released this week suggests the U.S. Trade Representative believes Canada isn't doing enough to stop goods made using forced labour from entering the country. BMO notes that, as of 2024, businesses and governments operating in Canada must report the steps they're taking to identify and reduce forced labour in their supply chains. Regardless, BMO says, the USTR's findings suggest Canada won't escape the spotlight as the U.S. attempts to replace IEPPA tariff revenues. The duties under this investigation could be as high as 25%, but there's no word yet on whether they'd include USMCA exemptions, BMO notes.

Plus, BMO notes, the WSJ reports the White House will announce changes to steel and aluminum tariffs as soon as this week. BMO says: "The changes are meant to simplify the rules (a good thing) but could actually end up with higher duties on net (not a good thing)."

In citing what's changing, BMO notes the tariff on finished products containing steel and/or aluminum would go from 50% on the portion of those metals used in the product to 25% on the whole thing. "So, the net impact will depend on the content of the item, but could result in higher costs for goods that didn't have much of those metals to begin with," it adds.

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