Canadian Merchandise Trade (November 2024)

Canadian trade deficit narrows in November

• Canada’s merchandise trade balance tallied a $323 million deficit in November, registering in the red ink for the ninth consecutive month. October's deficit was revised lower to $544 million.
• Merchandise exports gained some steam in November, rising by 2.2% month-on-month (m/m). All but two of 11 sectors registered increases on the month. Higher prices drove crude oil exports up by 4.8% on the month, while consumer goods exports rose for a second consecutive month (+4.4% m/m). Pharmaceutical goods exports (+11.9% m/m) also provided a hefty assist to the headline number.
• Meanwhile, total merchandise imports also nudged higher for a second consecutive month, up by 1.8% m/m in November, with the biggest gains coming from consumer goods (+3.8% m/m), basic and industrial chemical, plastics and rubbers (+4.3% m/m), and industrial machinery (3.0%).
• In volume terms, merchandise exports rose by 0.5% m/m and imports were up by 0.8% m/m.
• Canada's merchandise trade surplus with the United States widened to $8.2 billion in November from $6.6 billion the month prior.

Key Implications

• With two months of Q4 trade data in the cards, it looks like trade will be a slight tailwind to Q4 GDP growth. Statistics Canada is still undergoing a major trade-related, data collection transition—so take these figures with a grain of salt.
• The outlook for Canadian trade in 2025 is cloudy at best. Incoming president Trump takes office in a couple of weeks and is still threatening a 25% tariff on all Canadian exports. Our base case is that Canada largely avoids a full-scale implementation of Trump's tariff plan, given our energy-heavy relationship with the U.S.—though we acknowledge that any tariff levied against Canada has negative consequences for economic growth. There may be signs that manufacturers and retailers are front-running potential tariffs, as total import and export volumes have risen over the last couple of months.          

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