Canada delivered a fifth consecutive merchandise trade surplus in July, albeit narrowing to $769M, primarily driven by the US.

The sequential moderation reflected a $1.6B increase in imports…

… primarily driven by the auto sector, which has been on a steady grind higher after a weak start to the year.

Adding additional pressure to the surplus were lower exports of metals, non-metallic minerals and energy, reflecting a decline in precious metals (13.1%), natural gas (14.0%) and crude oil (5.6%). Partly offsetting the decline were higher exports of aircraft (80.1%) and canola (43.2%).

The decline in crude oil and gold drove a 6.6% M/M drop in exports south of the border…

… and resumed a diversification trend away from the US as exports to other countries grew 7.4% M/M and notched a new record.

With threats of more tariffs by the US in addition to the ones proclaimed in July, we’ll be watching to see if the trend continues in future prints.

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