By Robb M. Stewart
OTTAWA--Record Canadian imports in February widened the country's trade deficit with the world to the biggest in six months and Canada's longstanding surplus with the U.S. to its thinnest in almost six years.
Canada recorded a merchandise-trade deficit of 5.74 billion Canadian dollars, the equivalent of about US$4.14 billion, Statistics Canada said Thursday. That was much larger than the C$2.5 billion shortfall economists anticipated.
Imports jumped 8.4% between January and February to an all-time high of C$72.05 billion as inbound shipments of gold led widespread increases. That included a 13.6% surge in imports from the U.S. of gold, passenger cars and other goods, as well as a 1.6% increase in imports from countries other than the U.S. to a record high.
This outpaced a 6.4% increase in exports to C$66.31 billion in the latest month, the highest level since March of last year. Exports to the neighboring U.S. were up 4.4%, while exports to countries beyond America jumped 10.5% to the highest level on record.
Canada has racked up trade deficits five months running, and the C$9.92 billion gap over the first two months of 2026 marked a record year-to-date shortfall.
At the same time, the country's surplus with the U.S. has steadily narrowed as trade relations have been increasingly fraught and Prime Minister Mark Carney has sought to decouple Canada from a dependence on its biggest trading partner.
Canada's goods-trade surplus with its neighbor narrowed to the smallest since May 2020 at C$1.73 billion in February from C$4.94 billion the month before. And its deficit with non-U.S. countries also narrowed, to C$7.48 billion from C$9.12 billion the month before.
Canadian trade has been hit hard by the Trump administration's isolationist policies and tariffs, and uncertainty has dampened business investment. The Iran war has added to uncertainty and increased market volatility.
Canada's economy is on track to show modest growth in the first quarter of the year, before the full shock of higher oil prices is felt. Gross domestic product edged up 0.1% in January from a month earlier as growth in oil and gas extraction and in construction helped to counter a pullback in manufacturing, and advance data from Statistics Canada indicates the pace accelerated to 0.2% growth in February as manufacturing recovered.
Bank of Canada policymakers expect the jump in energy costs will push up inflation in the near term, though they have said it is too early in the Middle East conflict to say what the impact will be on the economy for a country that is a net energy exporter.
Exchanges of gold played a big part in the swings in trade in February. Excluding precious metals and their alloys, which for Canada is largely unwrought gold, exports for the month were up 5.5% and imports rose 5.8%.
Canadian exports of motor vehicles and parts soared 24.2% in February, rebounding from a sharp drop at the start of the year when extended shutdowns by auto-assembly plants in Ontario weighed heavily.
Precious-metals shipments from Canada also were up strongly, led by a rise in gold exports to the U.K. Exports of unwrought aluminum recovered from a drop in January, and there was a rise in shipments of farm, fishing and intermediate food products.
When international trade in goods and international trade in services were combined, Canadian exports rose 5.2% and imports increased 6.3%. As a result, Canada's trade deficit incorporating both goods and services widened to C$5.34 billion from C$4.21 billion in January.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
04-02-26 0918ET
