Canada Records First Trade Surplus in Six Months as Gold and Crude Exports Surge

Key facts

• Canada's trade balance swung from a deficit of $5.1 billion in February to a surplus of $1.8 billion in March.
• Exports rose 8.5% to $72.8 billion, the highest since January 2025, while imports fell 1.6%.
• Exports of unwrought gold, silver, and platinum group metals surged 37.7%, adding $3 billion.
• Energy exports increased 15.6% to $17.1 billion, with crude oil exports up 18.9% due to higher prices from the Strait of Hormuz closure.
• Exports to non-U.S. countries hit a record $24.3 billion, rising 9.1% for the second consecutive month.
• Exports to the United States rose 8.3% to their highest since March 2025, driven by crude oil and passenger vehicles.
• Imports from the U.S. declined 1.2%.
• The surplus is the first since September 2025.

A Surplus Born of War and Global Uncertainty

Canada posted its first merchandise trade surplus in six months in March, as exports of gold and crude oil to overseas markets surged amid the Iran war and global trade disruptions. The country’s trade balance swung from a deficit of $5.1 billion in February to a surplus of $1.8 billion, according to data released Tuesday by Statistics Canada. The turnaround was driven by an 8.5 percent jump in exports to $72.8 billion — the highest level since January 2025 — while imports fell 1.6 percent. The surplus marks a sharp reversal after months of deficits, and reflects how geopolitical turmoil can reshape trade flows in unexpected ways.

Gold and Crude Lead the Charge

Exports of unwrought gold, silver, and platinum group metals and their alloys soared by 37.7 percent, adding $3 billion to the export total. Much of that gold went to the United Kingdom, as investors sought safe havens amid the conflict in Iran. Energy exports rose 15.6 percent to $17.1 billion, with crude oil exports climbing 18.9 percent. Statistics Canada attributed the jump in crude oil values to a sudden price increase following the closure of the Strait of Hormuz, a critical chokepoint for global oil shipments. The war in Iran has disrupted supply routes, pushing up prices and benefiting Canadian producers who could redirect shipments to Europe. Exports of crude oil to Germany and the Netherlands saw particular strength.

Non-U.S. Markets Hit Record Highs

While exports to the United States rose 8.3 percent to their highest since March 2025, it was trade with other countries that provided the biggest boost. Exports to non-U.S. markets hit a record $24.3 billion, rising 9.1 percent in March after a 10.2 percent increase in February. This marks the second consecutive monthly record. The diversification away from the U.S. market is notable, as Canada’s economy has long been heavily reliant on its southern neighbour. The surge in non-U.S. exports was led by gold to the UK and crude oil to Germany and the Netherlands, reflecting shifting global demand patterns amid the war.

Imports Fall as Domestic Demand Weakens

Imports declined 1.6 percent in March, with imports from the United States falling 1.2 percent. The drop suggests softening domestic demand, possibly as businesses and consumers adjust to higher interest rates and economic uncertainty. Bank of Canada Governor Tiff Macklem warned Tuesday that interest rate hikes remain possible if high energy prices begin to feed through to other goods and services. “We stand ready to respond as needed,” Macklem told the House of Commons finance committee, signaling that the central bank is watching inflation pressures closely. The trade surplus, while welcome, could add to those pressures by boosting national income and spending.

Broader Economic Context and Risks

The trade surplus comes amid a mixed economic picture. Shopify Inc. saw its stock tumble about nine percent Tuesday after reporting first-quarter revenue growth but flagging a slowdown ahead. Meanwhile, the Competition Bureau is challenging Keyera Corp.’s proposed acquisition of natural gas assets in Alberta, arguing it could harm energy producers and raise costs. On the fiscal front, the government’s latest update has drawn mixed reviews. And while the Bank of Canada stands ready to act on inflation, the trade data offers a rare bright spot for an economy grappling with global uncertainty, tariff disputes, and a struggling restaurant industry that faces another tough year in 2026.

What Comes Next for Canada’s Trade Balance

The March surplus may prove temporary if the factors that drove it — particularly the Iran war and its effect on commodity prices — recede. The closure of the Strait of Hormuz has already begun to ease, and crude prices could normalize. Moreover, Canada’s trade surplus with the U.S. remains fragile, with softwood lumber still excluded from tariff relief lists and ongoing tensions over trade policy. For now, the data provides a measure of relief for policymakers and exporters. But the underlying volatility underscores how dependent Canada’s trade performance is on forces beyond its control: war, commodity prices, and the health of its largest trading partner.

The bottom line

• Canada recorded a $1.8 billion trade surplus in March, its first in six months, reversing a $5.1 billion deficit from February.
• Exports surged 8.5% to $72.8 billion, led by a 37.7% increase in gold and metals exports and a 15.6% rise in energy exports.
• The Iran war and closure of the Strait of Hormuz boosted crude oil prices and redirected shipments to Europe, driving export gains.
• Exports to non-U.S. markets hit a record $24.3 billion for the second straight month, signaling diversification away from the U.S.
• Imports fell 1.6%, with U.S. imports down 1.2%, reflecting softening domestic demand amid high interest rates.
• Bank of Canada Governor Tiff Macklem warned that persistent high energy prices could lead to interest rate hikes.