(March 12): Canada’s trade deficit widened in January as exports of motor vehicles and parts fell to the lowest level in more than four years.
Canadian goods exports decreased by 4.7%, marking the largest monthly percentage decline since April 2025, according to Statistics Canada’s international merchandise trade report on Thursday. That pushed the country’s trade shortfall to C$3.6 billion.
Economists surveyed by Bloomberg were expecting Canada’s trade deficit to shrink to C$1.1 billion January from C$1.3 billion in December.
The decrease in Canadian exports was driven by a sharp decline in vehicle and parts exports, which fell by 21.2% to C$5.4 billion, the lowest level since September 2021. Exports of passenger cars and light trucks saw the largest decline, falling 32.5% on the month.
Imports of vehicles and parts also declined by 4.5%, due to lower motor vehicle production in January caused by “atypical production stoppages,” the agency said.
Canada’s auto industry has taken a major hit from US tariffs over the past year, as the trade war disrupts integrated supply chains that have long relied on the relatively free flow of cars and parts across the border.
Last month, Prime Minister Mark Carney unveiled a new plan to bolster domestic vehicle production that promises increased financial incentives for carmakers who build and invest in Canada.
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Overall, Canadian imports fell by 1.1% in January. The decline was partially offset by higher imports of industrial machinery, equipment and parts.
“The shipment of modules and equipment from China for the construction of liquefied natural gas production infrastructure in British Columbia drove the increase in imports in this product group in January,” Statcan said.
Canada’s trade surplus with the US narrowed in January, as exports south of the border fell by 3.8%, compared to a 3.4% decrease in imports.
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Canada’s exports to countries other than the US fell by 6.5%, after reaching a record high in December. The decline was driven by lower shipments of unwrought gold to the UK. Imports from countries other than the US increased by 2.1%, contributing to a wider trade deficit of US$9 billion with those countries.
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