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    Home » Canada trade deficit widens as exports pivot beyond U.S.
    Business

    Canada trade deficit widens as exports pivot beyond U.S.

    February 2, 2026
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    MENA Newswire, OTTAWA: Canada’s exporters are expanding shipments to markets outside the United States as new and expanded U.S. tariffs reshape trade flows and push up costs for some cross border sales. Official trade data show exports to countries other than the United States reached a record high in October, led by gold to the United Kingdom and crude oil to China, before easing in November as gold shipments fell and motor vehicle exports weakened.

    Canada exporters widen markets as U.S. tariffs bite
    Canada exporters accelerate market diversification as U.S. tariffs lift costs and disrupt trade.

    The shift has unfolded alongside a series of U.S. tariff actions on major Canadian sectors. The United States imposed global Section 232 tariffs of 25% on steel and aluminum imports on March 12, 2025, then raised them to 50% on June 4, 2025 and broadened coverage to more derivative products. Separate Section 232 tariffs of 25% on automobiles took effect April 3, 2025, followed by 25% on certain auto parts on May 3, 2025.

    In November 2025, Canada’s merchandise exports fell 2.8% to $63.9 billion while imports edged down 0.1% to $66.1 billion, widening the goods trade deficit with the world to $2.2 billion, according to Statistics Canada. Canada’s merchandise trade surplus with the United States was $6.6 billion in November, while the deficit with countries other than the United States widened to $8.8 billion.

    A sharp pullback in precious metal shipments drove much of the November decline. Exports of metal and non metallic mineral products fell $3.2 billion, down 24.4%, after two strong months. Statistics Canada reported large declines in exports of unwrought gold to United Kingdom, the United States and Hong Kong. Despite the November drop, exports of unwrought gold, silver and platinum group metals and their alloys were up 39.5% from the start of 2025 compared with the same period in 2024, reflecting higher gold prices.

    Supply chains reroute under costs

    Bank of Canada said increased U.S. protectionism has raised costs and uncertainty, and that overall exports in the third quarter of 2025 were 4% lower than they were before U.S. tariffs were imposed. The central bank said some Canadian businesses and U.S. customers have become reluctant to do business with each other, and that firms have been seeking new export markets and suppliers beyond the United States, while shifting some imports to come directly into Canada rather than via the U.S.

    Trade figures also showed broad volatility in key manufacturing categories. Exports of motor vehicles and parts fell 11.6% in November to their lowest level in three years, with passenger cars and light trucks down 9.0%. Exports of medium and heavy trucks, buses and other motor vehicles fell 53.8%, coinciding with the introduction of new U.S. import tariffs on those products that took effect Nov. 1, 2025, Statistics Canada said. Imports of motor vehicles and parts fell 4.5% in November.

    Canada adjusts countermeasures and trade ties

    Canada has also changed its own tariff posture. The finance department said Canada removed 25% counter tariffs on many U.S. goods effective Sept. 1, 2025, while maintaining counter tariffs on steel, aluminum and automobiles. Canada later published lists of steel derivative products subject to 25% tariffs effective Dec. 26, 2025, underscoring the continued focus on metals as the trade dispute evolved.

    The political backdrop remains tense as trade policy and market access dominate relations between Canada and the United States. U.S. Treasury Secretary Scott Bessent warned Canadian Prime Minister Mark Carney against escalating tensions ahead of a formal review of the Canada United States Mexico trade agreement, according to public comments reported in late January. U.S. President Donald Trump has also threatened steep tariffs on Canadian goods, adding to uncertainty for exporters even as monthly data show non U.S. shipments can surge, led at times by gold and energy.

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