By Laura Dhillon Kane
(Bloomberg) — Falling gold exports and surging imports of the safe-haven steel pushed Canada to submit its second-largest commerce deficit on document, surpassed solely by the nadir it reached in April.
The nation’s shortfall with the world widened to $6.3 billion in August from an upwardly revised $3.8 billion in July, in accordance with Statistics Canada information launched Tuesday. That was deeper than all estimates in a Bloomberg survey of economists.
Whole exports fell 3% in August, the primary drop in 4 months, with declines in eight of 11 sectors. Imports rose 0.9%. Each had been pushed by robust variations in gold — exports of unwrought gold fell 11.8% that month, whereas whole imports would have fallen 1% if not this product part.
Exports to the U.S. — Canada’s largest buying and selling accomplice — fell 3.4%, once more partly as a consequence of gold. U.S. tariffs proceed to pummel Canadian exporters, and Canada’s items commerce surplus with the U.S. narrowed to $6.4 billion in August from $7.4 billion beforehand.
Prime Minister Mark Carney is about to debate the commerce conflict with U.S. President Donald Trump within the White Home later Tuesday. Canada’s imports of U.S. items are at their lowest degree since 2022, whereas exports to the U.S. are caught at 2021 ranges.
“Trying via the noise, it’s clear that Canadian commerce flows continued to face tariff-related headwinds in August,” Shelly Kaushik, senior economist at Financial institution of Montreal, stated in a report back to traders.
Further tariffs introduced in latest weeks on softwood lumber and prescription drugs level to additional challenges forward, she stated. Kaushik flagged a 22% surge in pharmaceutical and medicinal exports in August — potential front-running of U.S. tariffs.
“All eyes stay on ongoing negotiations, highlighted by Carney’s go to to the White Home right now,” she stated.
Canadian exports spiked within the first quarter as shippers rushed to get forward of Trump’s tariffs, earlier than tumbling within the second quarter because the levies took impact. To date this 12 months, exports are nonetheless up 0.3% in contrast with the identical interval a 12 months earlier.
In quantity phrases, exports had been down 2.8% in August, whereas import volumes fell 0.3%.
Market response to the report was muted, with the loonie regular at $1.3953 per U.S. greenback and the two-year authorities bond yield down a foundation level to 2.458% as of 9:11 a.m. in Ottawa. Merchants in in a single day swaps see a few 60% likelihood of a Financial institution of Canada charge lower on Oct. 29.
Regardless of three consecutive month-to-month decreases in Canada’s gold exports, following a document excessive in Might, these shipments are greater than 30% greater thus far in 2025 in contrast with the identical interval in 2024, as traders flock to the steel amid political volatility.
Exports of lumber and different sawmill merchandise plunged 25.4% in August, reaching their lowest degree since Might 2020. The steep drop adopted the U.S. climbing duties on Canadian softwood lumber in late July and early August, however preceded the newest tariffs.
Carney has sought to diversify Canada’s buying and selling companions because the U.S. turns into much less dependable — however the August information continued to indicate the extent of his problem. Exports to nations aside from the U.S. fell 2%, the third consecutive month-to-month decline.
–With help from Mario Baker Ramirez, Randy Thanthong-Knight and Erik Hertzberg.
©2025 Bloomberg L.P.
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Final modified: October 7, 2025
