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June 05, 2020

Canada’s trade deficit climbs to $3.3 billion in April

Statistics Canada announced that the country’s merchandise trade deficit with the world widened from $1.5 billion in March to $3.3 billion in April

The Federal agency says April production shutdowns in a number of manufacturing industries, falling energy product prices, the closure of many retail stores, and weaker demand due to physical distancing measures related to the COVID-19 pandemic, resulted in drastic decreases in Canada’s exports and imports.

Exports fell 29.7% to $32.7 billion in April, the lowest level in more than 10 years. Imports were down 25.1% to $35.9 billion, a value not seen since February 2011. These declines, in both absolute value and percentage, are unparalleled, as monthly decreases of this magnitude have never been observed.

Motor vehicles and parts showed the largest decreases in both exports and imports. Energy products were also a key contributor to the April decline in exports and imports.

The United States contributed the most to the drop in Canada’s international trade. While total trade declined $25.8 billion in April, total trade with the United States fell $23.4 billion, representing more than 90% of the decrease in Canada’s trade activity in April. The impact of COVID-19 on the Canadian and American auto manufacturing and energy product industries-which are heavily integrated-accounted for most of the decline observed in trade with the United States.

Exports to the United States fell 35.7%, while imports were down 35.3%. As a result, Canada’s trade surplus with the United States narrowed from $3.5 billion in March to $2.2 billion in April.

On a global perspective, Canada’s trade deficit with countries other than the United States widened from $5.1 billion in March to $5.4 billion in April. Exports to those countries decreased 11.7% in April. The strongest declines were in exports to Germany, the United Kingdom and Mexico. Imports from non-US countries were down 6.3%, primarily due to lower imports of motor vehicles and parts from Mexico, Japan and Germany. Following significant declines earlier this year, imports from China (+30.8%) rebounded in April, mainly on higher imports of computers and peripherals as well as textiles (face masks).

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