Canadian Merchandise Trade (February 2026)

Canada's Trade Deficit Widens in February

• Canada's trade deficit widened in February, up to $5.7 billion from a revised $4.2 billion in January.
• Exports in February gained a sturdy 6.4% month-on-month (m/m), after slipping substantially the prior month. A sharp reversal in motor vehicles and parts exports (+24.2% m/m) contributed most to the gain. In line with recent trends, exports of unwrought gold, silver and platinum groups were volatile, up by 14.2% m/m. In total, 9 of 11 product categories registered a gain, with other areas like energy products and consumer goods also seeing decent export growth.
• Goods imports surged in February (+8.4% m/m), with 10 of 11 subsectors booking a gain. Imports of metal and non-metallic mineral products (+45.6% m/m) and energy products (+20.1% m/m) from the U.S. were robust. Imports of motor vehicles and parts (+5.9% m/m) also provided a healthy assist.
• In volume terms, exports rose by 4.8% m/m while imports rose by a larger 7.1% m/m.
• Canada's merchandise trade surplus with the United States narrowed from $4.9 billion in January to $1.7 billion in February, the smallest surplus in nearly six years. Exports to non-U.S. destinations rose by 10.5% m/m, re-establishing an all-time high.

Key Implications

• Total trade activity in February was strong across the board, representing a sharp reversal from last month. With import volumes outpacing exports over the last two months, net trade will like act as a drag on Q1-2026 real GDP growth. That said, the recent meteoric rise in oil prices will boost nominal trade momentum in March and April, which should help narrow Canada's trade deficit. 
• The upcoming CUSMA review, due by July 1st, is a key risk to the Canadian outlook. After a quiet few months, Canadian representatives have started re-engaging U.S. counterparts, though substantial progress has yet to be achieved. Our base case is that the tri-lateral agreement remains in place, though uncertainty will continue to weigh on business confidence and investment.        

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