Trade deficit narrowed to $1.9B in April, data shows

Exporters told to expect ‘rough ride’ ahead

OTTAWA • Canada’s merchandise trade deficit was cut in half in April as exports rose to a record and imports moved lower, Statistics Canada said Wednesday

The agency said the deficit amounted to $1.9 billion compared with a deficit of $3.9 billion in March.

Economists had expected a deficit of $3.4 billion, according to Thomson Reuters Eikon.

“Canada’s trade picture perked up to start Q2, consistent with expectations that growth is going to bounce back after a soft start to the year,” said Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets.

“While there’s still tons of room for improvement on the trade front, this is welcome news and consistent with the Bank of Canada hiking rates at the July policy meeting.”

The smaller-than-expected deficit came as exports rose 1.6 per cent to a record $48.6 billion in April boosted by exports of metal and nonmetallic mineral products, consumer goods and energy products.

Imports fell 2.5 per cent in April to $50.5 billion as imports of motor vehicles and parts and consumer goods fell. In volume terms, exports rose 1.2 per cent and imports fell 2.4 per cent.

The latest trade figures came after an announcement by the U.S. last week that exemptions from steel and aluminum tariffs that Canada, Mexico and the European Union had received would expire.

“Despite the good monthly print Canadian exporters are in for a rough ride in the coming months, and perhaps quarters,” TD Bank senior economist Michael Dolega wrote in a report.

“The recently imposed tariffs on aluminum and steel, together with retaliatory Canadian tariffs, will likely hold back movement of metals and metal products across the border and be a drag on economic activity — particularly in Quebec and Ontario.”