Canada: Record exports and lower imports in April – NBF

Jocelyn Paquet, analyst at National Bank of Canada, noted that Canadian exports reached a record month in April and trade tensions with the US so far have not impacted on bilateral trade.

Key Quotes:

“Canada’s merchandise trade deficit narrowed from C$3.9bn in March to C$1.9bn in April. The smaller deficit was the result of a 1.6% jump in nominal exports and a 2.5% retreat in nominal imports.”

“April’s trade report showed Canada’s merchandise trade deficit shrinking to its lowest level in six months, thanks in large part to a drop in imports. To some, the latter pullback may be the sign of fading demand from Canadian consumers but we take comfort from the fact that this lackluster result came after the largest expansion in 16 months in March.”

“Better to focus on the positive, such as the rise in exports to a record level during the month or the fact that goods trade looks set to contribute to growth in Q2 for the first time in a year.”

“Up to now, the vagaries of the U.S. administration don’t seem to have overly impacted bilateral trade with our southern neighbor. Quite to the contrary, total merchandise trade with the U.S., i.e. exports plus imports, reached an all-time high of C$68.6bn in April.”

“But the situation could quickly take a turn for the worse, especially following the recent imposition of tariffs on Canadian steel and aluminum exports to the U.S. which do not make things easier for negotiators of a revamped NAFTA.”