Canada’s trade surplus expanded to its highest level in four years in May, marking the fourth consecutive monthly increase. Data released on Tuesday revealed that exports to the United States reached their peak since February last year.
According to Statistics Canada, Canada recorded a trade surplus of $4.24 billion in May, a 0.9% increase from the revised $3.41 billion in the previous month. This marks the third consecutive month of trade surplus for Canada, driven by a 1.5% surge in exports to the U.S., its primary trading partner. Analysts had forecasted a trade surplus of $2.85 billion.
Despite challenges faced by critical sectors in Canada due to U.S. tariffs, businesses are striving to diversify away from the U.S., which traditionally accounted for nearly three-quarters of Canada’s total exports. Trade experts emphasize the importance of diversification, but acknowledge that transitioning from established supply chains with the largest market globally may take time.
Exports to the U.S. increased by 1.5% to $53.72 billion in May, marking the fourth consecutive monthly rise. This boosted Canada’s trade surplus with the U.S. to $11.6 billion in May from $10.3 billion in April, the largest surplus since January 2025. The increase may be attributed to higher energy export prices, as per Statistics Canada.
While exports to non-U.S. countries continued to decline in May, albeit at a slower pace than in April, imports from non-U.S. nations rose, leading to a widened trade deficit of $7.4 billion for Canada with countries other than the U.S.
The growth in exports in May was primarily driven by increased shipments of metal ores and non-metallic minerals, which surged by 16.1%. Notably, sulfur exports played a significant role, especially with slowed shipments through the Strait of Hormuz due to Middle East conflicts. The ceasefire in mid-June allowed for a gradual return of shipments, boosting demand and prices.
Although exports of crude oil and gold, which were key contributors to Canada’s trade surplus, declined in May, other sectors such as consumer goods, industrial chemicals, and farm and fishing food products experienced notable gains.
Energy exports saw a 2% decline, mainly due to lower crude oil volume exports following a substantial increase from February to April. Total imports decreased by 0.2%, with a notable 18.2% drop in metal and non-metallic imports in May. BMO’s senior economist, Robert Kavcic, notes that while energy exports are still bolstering Canada’s trade figures, this could be the peak, as trade surpluses are subject to fluctuations in oil prices.
Kavcic highlights that net exports are expected to contribute significantly to growth in Q2, indicating a positive momentum in the Canadian economy after a sluggish two-quarter period.