Canadian Merchandise Trade (December 2025)

Canada's Trade Deficit Narrows in December

• Canada's trade deficit was slashed in half in December, narrowing from $2.6 billion in November to $1.3 billion in December.
• Exports in December advanced 2.6% month-on-month (m/m) partially recovering last month's dip. In line with recent trends, exports of unwrought gold, silver and platinum groups contributed most to the increase, jumping by 18% m/m. Exports of aircrafts (+26% m/m) also contributed meaningfully. Outside of this, 7 of 11 product categories registered a decrease on the month. Stripping out the impacts of CAD appreciation, exports rose by a more robust 4.5% m/m.
• Goods imports edged higher by 0.6% m/m in December, with 6 of 11 subsectors booking gains. Imports of motor vehicles and parts (+5.1% m/m) reversed last month's drop, while imports of metal and non-metallic mineral products (+7.7% m/m) contributed to the gain. Consumer goods (-4.5% m/m) offset the total import increase.
• In volume terms, both merchandise exports and imports were up 1.4% m/m. 
• Canada's merchandise trade surplus with the United States narrowed from $6.5 billion in November to $5.7 billion in December. Exports to non-U.S. destinations rose by 5.8% m/m, reaching an all-time high.

Key Implications

• This was a solid print for Canadian trade to cap off 2025. However, the details confirm that the recovery in trade since early last year has been volatile and uneven, particularly with product categories like precious metals experiencing substantial month-to-month swings. All told, exports outpaced imports in the fourth quarter, which should act as a tailwind to Q4 real GDP growth. 
• The upcoming CUSMA review will be in full focus over the coming months. While the base case is that the agreement remains in place, scenarios involving U.S. withdrawal could expose Canadian exporters to significantly higher tariffs and prolonged policy uncertainty, weighing on business confidence and investment. The pending U.S. Supreme Court ruling on the legality of IEEPA tariffs could also affect potential outcomes.        

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