Canada’s trade deficit widens as exports drop amid gold and aluminum tariff impacts

Canada’s merchandise exports fell three per cent in August while imports rose 0.9 per cent, widening the national trade deficit from $3.8 billion in July to $6.3 billion, Statistics Canada reported.

The decline marked the first drop in exports since April, with decreases in eight of 11 product categories. Exports of metal and non-metallic mineral products fell 7.6 per cent, largely due to an 11.8 per cent drop in unwrought gold exports to the U.S. Forestry products were also down 10.1 per cent as softwood lumber shipments plunged 25.4 per cent following higher U.S. anti-dumping and countervailing duties that took effect in late July.

Industrial machinery exports dropped 9.5 per cent, led by declines in equipment shipments to the U.S. and Europe.

Exports to the U.S fell 3.4 per cent after three months of gains, narrowing Canada’s trade surplus with its largest trading partner to $6.4 billion. Imports from the U.S. were down 1.4 per cent. Trade with countries other than the U.S. showed a record deficit of $12.8 billion as exports slipped two per cent and imports rose 4.2 per cent.

Meanwhile, U.S. tariffs on Canadian aluminum have sharply reduced shipments south of the border. After Washington raised tariffs to 50 per cent in June—with no CUSMA exemptions—Canadian aluminum exports averaged $848 million per month from April to August, down 24 per cent from 2024 levels. Exports to other markets, including the Netherlands, Italy and Poland, have surged as producers seek new buyers.

Despite recent volatility and U.S. trade measures, Canada’s total exports for the first eight months of 2025 were up slightly by 0.3 per cent compared with the same period last year.