Canada's trade surplus balloons to $4.2 billion as exporters race U.S. tariffs

OTTAWA — Canada’s merchandise trade surplus widened substantially to $4.2 billion in August as exporters rushed to increase shipments to the United States before President Donald Trump’s new tariffs took effect.

Statistics Canada reported the figure on Tuesday, which was far above the $1.55 billion surplus analysts had forecast and up from a revised $787 million in July.

Exports to the U.S. surged 8.1 per cent in August, while imports from the U.S. fell 2.5 per cent.

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"This is the largest positive monthly change ever observed in Canada’s trade balance with the United States," Statistics Canada said.

That drove Canada’s trade surplus with its largest trading partner to $11.2 billion, a 19-month high, and lifted the share of exports going to the U.S. to almost 70 per cent for the first time since September 2025.

The agency suggested that threats of new Section 338 tariffs from the United States might have fuelled a rush in orders from U.S. businesses seeking to get ahead of higher duty payments.

Trump’s new tariffs, which cover roughly $20 billion of Canadian exports, came into effect on Aug. 22 and apply to a variety of products including wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment.

Katherine Judge, a senior economist at CIBC, said in a note to clients that the spike in U.S. exports was thanks to firms front-running tariffs.

"The increase is therefore probably temporary and will unwind come September," she said.

Canada’s overall exports increased by 2.5 per cent in August to $77.91 billion, after falling 2.6 per cent in July.

Exports of energy products, refined petroleum products and crude oil, posted the biggest overall gain, increasing by 4.7 per cent to $19.03 billion.

Excluding energy products, exports were up 1.8 per cent. In volume terms, total exports rose 2.5 per cent.

Exports of consumer goods rose 6.6 per cent, industrial machinery, equipment and parts were up 10.1 per cent and electronic and electrical equipment and parts increased 11.0 per cent in August.

Imports fell two per cent to $73.71 billion, with imports of motor vehicles and parts posting the largest decline.

Canada’s efforts to diversify to non-U.S. export markets took a step back in August.

Exports to countries other than the United States fell 8.5 per cent, largely erasing an 8.2 per cent jump observed in July.

The country’s trade deficit with nations other than the U.S. widened to $7.0 billion in August from $5.3 billion in July.

Economists said September data will show a more accurate impact of the new U.S. tariffs, as well as the effect of Canadian counter-tariffs on U.S. imports and Trump’s ban on some goods imports from Canada.

Canada’s counter-tariffs came into effect on Sept. 8.

"Canada’s trade position is likely to deteriorate and exports will remain under pressure in Q4 unless a trade deal with the U.S. is reached," Judge said.

RBC assistant chief economist Nathan Janzen said in a note that ongoing exemptions for other exports under the Canada-U.S.-Mexico Agreement should keep economic damage contained.

"We continue to expect the new tariffs imposed by the U.S. administration will have a significant impact on directly targeted sectors but with more than 80 per cent of Canadian exports to the U.S. still maintaining duty-free access under USMCA we expect limited spillover to the broader economy," he said.

The Canadian dollar strengthened slightly after the trade data was released.

With files from BNN Bloomberg, CBC News and The Globe and Mail