Amid a protracted trade war, Canadian exports to the United States are at one of the lowest proportions on record, while exports to other countries have reached a record high, according to the latest numbers from Statistics Canada.
Data show Canadian exports to the U.S. have decreased for the fourth consecutive month, seeing a 0.9 per cent drop in May. The average share of total Canadian exports to the U.S. is also down, from 75.9 per cent last year, to 68.3 per cent in May, a near-record low.
Imports from the U.S. have also been on the decrease for the third consecutive month.
The shifts come amid an ongoing trade war with the United States, which began in February when U.S. President Donald Trump began implementing a series of significant and stacked tariffs on Canadian goods.
A slate of Canadian countermeasures is also in place, while the self-imposed deadline to reach a new economic and security deal is fast approaching. Following the G7 summit in Kananaskis, Alta., last month, a readout from a meeting between Trump and Prime Minister Mark Carney stated the two leaders are working toward an agreement by July 21.
“There’s no question this is taking a big toll on Canadian businesses,” said Canadian Federation of Independent Business (CFIB) President and CEO Dan Kelly in an interview with CTV News. “Every month that we don’t have a trade deal leads to these kinds of challenges.”
Kelly added that the uncertainty is “what’s killing businesses,” because they don’t know whether they should be “ramping up, ramping down, putting projects on hold.”
“Businesses are really kind of in suspended animation right now, and that is not helpful for business growth and development in the long term,” Kelly added.
Carney, meanwhile, has pledged to diversify Canada’s trade markets, in part to insulate the economy from the effects of Trump’s tariffs, and also to find ways to reduce reliance on the United States.
According to Statistics Canada data from May, Canadian exports to countries other than the U.S. increased by 5.7 per cent, a record high.
“I think if we can in fact get a deal fairly soon, the long-term impacts of this will be kept to a minimum,” Kelly said. “But it has, I think, spurred another round of business diversification on the part of many Canadian companies that are looking at other places within Canada to sell their goods or buy products from, as well as doing that with other countries than the United States.”
“But the U.S. is so big and on our doorstep that if we get a trade deal and we get this uncertainty behind us, I suspect we will look back at this as a challenge, a moment in time, and move on,” he added.
The increase in exports to countries other than the U.S. came largely in the form of higher unwrought gold exports to the United Kingdom, crude oil to Singapore and unwrought aluminum and pharmaceutical products to Italy, offset by lower canola and crude oil exports to China, according Statistics Canada.
Andrew DiCapua, principal economist with the Canadian Chamber of Commerce, said it’s possible “the worst is behind us.”
“Exporters, Canadian companies, are taking that spare capacity that the United States created, or the empty space on the order books, and are able to, in some cases, fill it with other markets,” he said in an interview with CTV News.
The figures from the statistics agency also show Canada’s global trade deficit narrowed slightly in May, down to $5.9 billion from a record $7.6 billion the previous month, with more exports and fewer imports.
DiCapua said not all companies have the capacity to switch contracts back and forth between the United States and other markets as the tariff landscape changes.
“So, these are new relationships, in some cases, that companies are having to form,” he said. “But of course, if things improve in terms of Canada-U.S. trade policy (and) relations, we could see a positive rebound in the numbers in the months to come.”
Kelly said while there’s “no question this is putting pressure on businesses,” Statistics Canada’s reporting does include some positive news on the interprovincial trade front, with CFIB seeing a bump in members trading within Canada.
With files from CTV News’ Rachel Aiello
