Canada saw its merchandise trade surplus reach a four-year peak in May, marking a fourth consecutive monthly increase. Statistics revealed that exports to the United States hit their highest level since February of the previous year. The country achieved a trade surplus of $4.24 billion in May, up 0.9% from the revised figure of $3.41 billion in the prior month.
This marked Canada’s third consecutive month of trade surplus, primarily driven by a 1.5% surge in exports to the U.S., its largest trading partner. Analysts had predicted a trade surplus of $2.85 billion, indicating an outperformance.
Despite challenges posed by U.S. President Donald Trump’s tariffs impacting key Canadian sectors, efforts to diversify away from the U.S. market have been ongoing. However, experts caution that unraveling long-established supply chains from the U.S. may take time.
Export figures to the U.S. escalated by 1.5% to $53.72 billion, marking the fourth consecutive monthly rise. Conversely, imports from the U.S. experienced a 1.4% decline. As a result, Canada’s trade surplus with the U.S. expanded to $11.6 billion in May from $10.3 billion in April, reaching its highest level since January 2025, attributed partly to increased energy export prices.
Exports to countries other than the U.S. continued to decline in May, albeit at a slower rate than in April, while imports from non-U.S. nations rose. This led to a widening trade deficit of $7.4 billion for Canada with countries other than the U.S.
The notable monthly export increase was primarily fueled by a 16.1% rise in outbound shipments of metal ores and non-metallic minerals, with sulfur exports prominently driving the growth. The Middle East conflict had disrupted crude oil and fertilizer shipments, spurring demand and prices in other markets. However, shipments have been gradually resuming post a ceasefire in mid-June.
Despite these positive trends, Canada experienced drops in crude oil and gold exports, which had been significant contributors to its trade surplus. Energy exports saw a 2% decline due to lower crude oil volumes, following a substantial increase from February to April. Total imports also decreased by 0.2%, with metal and non-metallic imports witnessing an 18.2% drop in May.
Senior economist Robert Kavcic from BMO noted that while energy exports have started to decline, they continue to bolster Canada’s trade performance. However, Kavcic cautioned that trade surpluses can fluctuate with oil price changes and suggested that the current figures may represent the peak for now. Despite this, net exports are expected to bolster growth in Q2, indicating a positive turn for the Canadian economy.