OTTAWA — Canada's merchandise trade deficit narrowed to $4.9 billion in July as the trade surplus with the United States grew in part because of higher exports of oil and cars.
Statistics Canada said Thursday that the overall result compared with a revised deficit of $6 billion in June.
The results came as exports to the U.S. rose five per cent, while imports from Canada's largest trading partner fell 2.2 per cent to result in a trade surplus of $6.7 billion for July compared with $3.7 billion in June.
TD economist Marc Ercolao said there is still considerable uncertainty on the trade front for the quarter ahead.
"On the plus side, the Canadian government recently removed counter-tariffs on U.S. imports, which should aid in more positive discussions with the U.S. administration around the state of trade," Ercolao wrote.
"On the other hand, Canadian export rotation into non-U.S. markets may not be having the same staying-power as exports abruptly shifted back to the U.S. in July."
The results for July came as overall exports rose 0.9 per cent to $61.9 billion with exports of energy products up 4.2 per cent boosted by a 2.3 per cent increase in crude oil exports.
Exports of motor vehicles and parts increased 6.6 per cent in July as Statistics Canada said seasonal stoppages at the auto assembly plants were less severe this year because of the production slowdown caused by, among other things, U.S. tariffs.
Canadian exporters have been adapting to ensure their goods are eligible to enter the U.S. tariff free under the Canada-U.S.-Mexico Agreement on trade, however the steel, aluminum and auto sectors continue to face specific tariffs.
Statistics Canada said total exports have risen for three consecutive months and are up three per cent since their 11.2 per cent plunge in April.
Total imports fell 0.7 per cent to $66.8 billion in July as imports of industrial machinery, equipment and parts dropped following the one-time import of a module for an oil project off the coast of Newfoundland in June.
BMO senior economist Shelly Kaushik said the July trade report was subject to some one-time factors and adjustments that highlight the volatility of these figures in any given month.
"Still, the underlying flows were relatively decent in the context of ongoing trade uncertainty, and could set the stage for modest economic growth in Q3," Kaushik wrote in a report.
Overall exports to countries other than the U.S. fell 8.6 per cent in July, while imports from countries other than the U.S. gained 1.3 per cent for a trade deficit with countries other than the U.S. of $11.7 billion in July compared with $9.7 billion in June.
In volume terms, overall exports rose 1.6 per cent in July, while imports fell 0.9 per cent.
In a separate report, Statistics Canada said the country's international trade in services posted a surplus of $500 million in July compared with a deficit of $200 million in June as exports of services rose 2.6 per cent and imports of services fell 1.3 per cent.
Combined, the agency said Canada's trade balance for goods and services amounted to a deficit of $4.4 billion in July, down from a deficit of $6.2 billion in June.
This report by The Canadian Press was first published Sept. 4, 2025.
The Canadian Press
