FX.co ★ Canada Trade Deficit Widens More Than Expected

Canada’s merchandise trade deficit widened to C$3.6 billion in January 2026, up from a C$1.3 billion shortfall in December and significantly above the consensus forecast of a C$0.9 billion deficit.

Exports declined 4.7% month over month to C$62.48 billion. The drop was led by a 21.2% fall in motor vehicle and parts exports, as production stoppages disrupted passenger car shipments, and by a 16.0% decrease in aircraft and other transportation equipment and parts. These weaknesses were partially offset by a 4.1% increase in energy product exports, driven mainly by stronger natural gas sales. Exports to the United States were down 3.8%.

Imports edged down 1.1% to C$66.13 billion. The overall decline was led by lower imports of motor vehicles and parts (-4.5%) and electronic and electrical equipment and parts (-3.6%), while imports of industrial machinery, equipment and parts rose 3.4%.

As a result, Canada’s trade surplus with the United States narrowed to C$5.4 billion, whereas the trade deficit with countries other than the United States widened to C$9.0 billion.