Statistics Canada announced that Canada’s trade deficit widened in June. Canada’s economy has posted large trade deficits over the last three months as trade tensions with the US escalate. Canada’s economy is highly dependent on trade with the US. However, Canada’s federal government has been seeking to nurture robust trade relationships with other countries around the world, which might help offset the negative impact of trade disruptions with the US. Here’s more from June’s trade report.

• Canada’s trade deficit widened to $5.86 billion in June. May’s trade deficit was revised down to $5.49 billion. Over the second quarter, Canada saw a record-high trade deficit. The trade deficit could persist as trade tensions with the US continue, which is disrupting trade activity.
• Canadian exports increased by 0.9% in June over the previous month. The increase was driven by a rise in exports of energy products and intermediate food products. Exports to the US rose by 3.1% in June, but were down significantly compared to the same month last year.
• Imports also moved higher, rising by 1.4%. Imports were boosted by a large order for high-value equipment for an oil project on the east coast.
• In the US, the trade deficit shrank to US$60.2 billion, which was the lowest trade deficit since 2023. Imports declined at a faster pace than exports over the month. Imports surged higher earlier this year as companies tried to get ahead of expected tariffs.

Trade in Canada and the US is expected to remain relatively volatile in the coming months. The US placed additional tariffs on many countries around the world last week, including raising the tariff on Canadian goods that aren’t included in the United States-Mexico-Canada Agreement to 35%. Yesterday, US President Donald Trump said he will soon announce tariffs on semiconductors and pharmaceutical products. Canada remains in negotiations with the US to reach a trade deal.

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