New data shows there was an increase in Canadian exports to its southern neighbour in June even amid ongoing U.S. tariffs, but economists say one month is too soon to say trade is rising with the Americans.
The data, released Tuesday, shows exports to the U.S. increased 3.1 per cent in June after four consecutive months of decreases.
Statistics Canada notes, however, exports were still down 12.5 per cent compared to June 2024.
BMO senior economist Shelly Kaushik said in an interview that trade data can be volatile on a monthly basis.
“The data is also very highly susceptible to revision. That’s something to keep in mind in general, but also especially when there are so many announcements in a lot of swings, we see things like tariff frontrunning impacting the data a lot on a monthly basis,” she said.
But it’s not just products being sent to the U.S. that is on the rise. Imports from the U.S. were up 2.6 per cent in June — the first increase after three consecutive monthly decreases.
According to Statistics Canada, the increase in imports was in large part due to the import of a module for an offshore oil project.
As a result of exports rising more than imports, Canada’s trade surplus with the U.S. rose from $3.6 billion in May to $3.9 billion in June.
Kaushik said as April and May were fairly “depressed” in reaction to the tariffs, so while June may have seen an increase it doesn’t mean it’s a substantial change.
“Increasing just a little bit from very, very weak levels still implies quite weak,” she said.
Canada continues to face a range of tariffs from the U.S. amid President Donald Trump’s ongoing trade war.
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The U.S. has imposed a 50 per cent tariff on steel and aluminum imports from Canada, as well as 25 per cent duties on the automobile industry and certain copper products.
Last Friday, the U.S. also placed a 35 per cent tariff on Canadian goods on Friday, though the White House confirmed products under the Canada-United States-Mexico agreement (CUSMA) would remain exempt from the higher tariff.
The White House added that goods transshipped through other countries to avoid the 35 per cent tariff will instead be charged a tariff of 40 per cent.
RBC Economics assistant chief economist Nathan Janzen said that exemption is more important than an increase in trade.
“I think the good news there is that most of our exports to the United States still have been able to access that market it appears duty-free through an exemption from duties for products that are compliant with the USMCA (CUSMA) trade agreement,” he said.
Janzen said the U.S. census bureau found 92 per cent of Canadian exports to the U.S. crossed the border duty-free in June — an increase from 91 per cent in May and 89 per cent in April.
Janzen, in a report published Tuesday, also noted the average effective tariff rate on imports from Canada remains one of the lowest on trading partners at 2.4 per cent. By comparison, the average U.S. rate on all imports was 8.9 per cent.
However, he cautioned that rate will rise due to the newly-imposed 35 per cent tariff yet adds the increase will still only apply to a “relatively small share” of non-CUSMA compliant exports.
What could impact Canada on a wider scale, Janzen said, is how the U.S. import market could be impacted if bigger tariffs are imposed.
“If U.S. tariff hikes were so large globally that it hurts the U.S., particularly the very trade sensitive U.S. industrial sector, then if that happens that obviously has negative spillovers for Canada just because our industrial sector is so closely integrated with that of the United States,” Janzen said.
While Statistics Canada noted an increase in trade with the U.S., it also found exports to countries other than the U.S. dropped 4.1 per cent in June, after reaching a record high in May.
It noted, however, compared to June 2024 exports to other countries were up 14.7 per cent.
Overall, Canada’s trade deficit with the world widened to $5.9 billion in June, up from $5.5 billion in May.
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