Canadian exporters in for a rough ride, says TD.
OTTAWA—Canada’s merchandise trade deficit was cut in half in April as exports rose to a record and imports moved lower, Statistics Canada said Wednesday.
The agency said the deficit amounted to $1.9 billion compared with a deficit of $3.9 billion in March.
Economists had expected a deficit of $3.4 billion, according to Thomson Reuters Eikon.
“Canada’s trade picture perked up to start Q2, consistent with expectations that growth is going to bounce back after a soft start to the year,” said Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets.
“While there’s still tons of room for improvement on the trade front, this is welcome news and consistent with the Bank of Canada hiking rates at the July policy meeting.”
The smaller-than-expected deficit came as exports rose 1.6 per cent to a record $48.6 billion in April boosted by exports of metal and non-metallic mineral products, consumer goods and energy products.
Meanwhile, imports fell 2.5 per cent in April to $50.5 billion as imports of motor vehicles and parts and consumer goods fell.
In volume terms, exports rose 1.2 per cent and imports fell 2.4 per cent.
The latest trade figures came after an announcement by the U.S. last week that exemptions from steel and aluminum tariffs that Canada, Mexico and the European Union had received would expire. Canada has responded with its own tariffs on U.S. steel and aluminum imports as well as tariffs on a broad range of consumer goods.
“Despite the good monthly print Canadian exporters are in for a rough ride in the coming months, and perhaps quarters,” TD Bank senior economist Michael Dolega wrote in a report.
“The recently imposed tariffs on aluminum and steel, together with retaliatory Canadian tariffs, will likely hold back movement of metals and metal products across the border and be a drag on economic activity—particularly in Quebec and Ontario.”
Statistics Canada said that last year the export value of aluminum products subject to the new tariffs was about $9.2 billion, while the value of the steel products was about $7.2 billion.
The agency said the import value of U.S. goods that may be subject to Canada’s proposed tariffs was $19.4 billion in 2017.
In April, Canada’s merchandise trade surplus with the United States increased to $3.6 billion in April from a $2.0-billion surplus in March as exports of crude oil and bitumen increased and imports of imports of passenger cars and light trucks fell.
Canada’s trade deficit with countries other than the United States narrowed to $5.5 billion in April compared with $6.0 billion in March.News from © Canadian Press Enterprises Inc. 2016