In June, Canada had a trade deficit of C$5.86 billion, a bit better than the expected C$6.3 billion. Exports went up slightly to C$61.74 billion, while imports climbed to C$67.6 billion. Exports to the U.S. grew by 3.1% from May but were still 12.5% lower than last year. Imports from the U.S. increased by 2.6%, breaking a three-month streak of decline, thanks to purchases for an offshore oil project. This widened Canada’s trade surplus with the U.S. from C$3.6 billion in May to C$3.9 billion.

Exports And Imports Overview

Exports to countries other than the U.S. dropped by 4.1% from May, marking the first decline since February, but were still 14.7% higher compared to last year. Significant decreases in shipments to the UK and Japan were somewhat offset by increased exports to China. Imports from other countries fell by 0.3%, leading to a larger trade deficit of C$9.8 billion in June. Canada’s total exports in the second quarter decreased by 12.8%, with notable drops in energy products, motor vehicles, and consumer goods. Imports fell by 3.9%, even with a rise in metal and mineral products. The trade balance changed dramatically, swinging to a C$19.0 billion deficit from a small C$388 million deficit in the previous quarter. Looking at June’s trade data, the headline figure was a minor positive surprise, but it was overshadowed by the record C$19.0 billion trade deficit for the entire second quarter. The sharp 12.8% decline in Q2 exports, particularly the 12.5% year-over-year drop in exports to the U.S., points to significant weakness.

Implications For Bank Of Canada And Currency Market

This weak performance in Q2 leaves the Bank of Canada with little room to tighten monetary policy. With July’s inflation at a cooler 2.5%, the central bank is more likely to keep its current approach for now. This economic softness suggests that a cautious path is the most likely for policymakers. We expect the Canadian dollar to face tough challenges in the coming weeks. The currency has already had a rough time, with USD/CAD rising from 1.3500 to around 1.3750 after the extent of Q2 weakness became clear in July 2025. This trend mirrors patterns seen during late 2023, when global slowdown fears were high. Given this outlook, traders should prepare for increased volatility, especially with upcoming data releases like the final Q2 GDP figures. Strategies that benefit from price swings, rather than steady trends, could be advantageous. The significant drops in key sectors like autos and consumer goods indicate a fragile economy. Ongoing trade talks with the U.S. add more uncertainty. Although Canada’s surplus with the U.S. grew slightly in June, the decrease in non-energy exports shows a vulnerability beyond just commodity prices. Any negative news from these negotiations could lead to sharp reactions in currency markets. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now