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Investing.com -- Canada’s trade relationship with the United States provided a critical lift in June, as both exports and imports surged, buffering broader global softness. Exports to the U.S. rose 3.1% month-over-month, while imports gained 2.6%, driving Canada’s merchandise trade surplus with its largest partner to $3.9 billion, up from $3.6 billion in May.
This increase stands in contrast to the overall merchandise trade balance, which registered a wider deficit of $5.9 billion in June compared to $5.5 billion a month earlier. Total (EPA:TTEF) imports rose 1.4%, outpacing a 0.9% increase in exports, marking the first time in four months overall imports posted growth.
CIBC (TSX:CM)’s Andrew Grantham reacted by saying, "While today’s data suggested an increase in two-way trade on the surface, the detail was weaker, with imports exaggerated by one high-value shipment and export growth driven in part by higher energy prices. While trade flows should stabilize in the months ahead, the level of trade will remain lower than it was previously due to ongoing US tariff policy and related uncertainty."
June imports were significantly influenced by a one-off $2 billion shipment in the industrial machinery category, destined for an oil project off Newfoundland. When excluding this high-value import, total imports would have registered a 1.9% decline, highlighting underlying softness in several segments of the economy.
On the export side, energy products provided the largest boost, up 3.8% month-over-month, led by strength in crude oil and refined petroleum products. Rising prices, amid heightened geopolitical tensions in the Middle East, supported the value gains, particularly in diesel shipments to the United States.
At the same time, a 6.7% jump in exports of farm, fishing and food products helped bolster the headline export figure, with live animal shipments up a notable 41.6%. Exports of agricultural commodities such as canola also contributed to the growth, largely supported by demand from both the U.S. and China.
However, weakness in key sectors remains evident. Exports of motor vehicles and parts fell 4.2%, with passenger cars and light trucks dropping for a third consecutive month. Imports of consumer goods and pharmaceuticals also posted declines, underscoring broader economic uncertainties.
Trade with non-U.S. countries was more subdued, as exports to those markets declined 4.1% in June, reversing strong gains from May. This divergence widened Canada’s trade deficit outside the U.S. to $9.8 billion, weighing on the overall trade balance despite the North American rebound.
Collectively, the June trade data pointed to a mixed performance for Canada’s external sector, with gains in energy and agriculture offset by declines in key manufacturing categories. Despite a modest rebound in monthly figures, persistent softness in real export volumes and widening deficits suggest underlying challenges remain for trade growth in the near term.