Canadian Merchandise Trade (July 2026)

Canada's Trade Books Post Modest Surplus in July

• Canada's trade balance tightened to $769 million in July from $4.2 billion the prior month. 
• Exports in July fell by 2.3% month-on-month (m/m) after a five-month string of sturdy gains. Exports of metallic and non-metallic minerals (-15.8% m/m) contributed most to the pullback, while crude oil exports (-5.6% m/m) also pulled down the headline number. Offsetting some of the step-back was a robust 34.9% m/m increase in aircraft and other transportation equipment exports. In total 7 of 11 product groups registered a decline on the month.
• Goods imports on the other hand rose by 2.2% m/m in July. The gain was narrowly based, led by an 11.4% m/m jump in motor vehicles and parts imports (now sitting at record highs) and a 9.3% m/m jump in metal and non-metallic mineral imports. Otherwise, import declines in key sectors like energy products and electrical equipment tempered the headline gain. 
• In volume terms, total exports were down by 1.5% m/m while imports were up by 2.2% m/m. 
• Canada's merchandise trade surplus with the United States narrowed to $5.9 billion in July from $10.3 billion in June. Exports to non-U.S. destinations reached a record high, up 7.4% m/m.

Key Implications

• July's pullback in exports and rebound in imports marks a partial reversal of the outsized trade gains recorded in Q2. However, with new U.S. Section 338 tariffs taking effect on August 22, some tariff-related front-running may provide a temporary lift to August trade flow data. Any resulting strength in August would likely borrow from future activity rather than signal firmer underlying demand. Trade contributions are therefore likely to remain choppy in the quarters ahead as higher tariffs continue to disrupt cross-border flows.
• The 50% U.S. Section 338 tariffs and Canada’s counter-tariffs (effective next week) mark a further escalation in bilateral trade tensions. The direct hit to aggregate growth should be modest given the targeted scope of the measures, but affected industries will remain under pressure. More broadly, stalled negotiations and the risk of further retaliation could weigh on confidence and possibly result in the delayed business investment and hiring the Bank of Canada warned about yesterday.
  
   
   

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