Canada trade slows down to $4.5 billion deficit in August, second-largest on record

Canada’s trade balance just fell off a cliff. In August, the country posted a $4.5 billion trade deficit, making it the second-largest on record.

The only time it’s ever been worse was back in April. This time, the blame sits squarely on gold, or more specifically, a double whammy of plunging gold exports and rising imports of the exact same thing.

According to data released Tuesday by Statistics Canada, the August shortfall widened from July’s already ugly $2.7 billion, which had been quietly revised upward.

This latest gap was wider than every economist forecast in Bloomberg’s survey. It wasn’t even close. And the issue? Gold again. Exports of unwrought gold dropped 11.8%, while imports of the metal were so high they singlehandedly masked a 1% fall in overall imports.

Exports to the US take a hit as gold skews trade data

Canada’s total exports fell 3% in August, snapping a four-month streak of growth. That slump hit eight out of eleven major sectors, dragging the entire number down. Imports, on the other hand, rose 0.9%, but only because of gold. Without that spike, they’d be down too.

Exports to the United States, Canada’s largest trade partner, also shrank. They dropped 3.4%, again partly due to less gold leaving the country. That brought the goods trade surplus with the US down to $4.6 billion, compared to $5.3 billion in July.

There’s been a messy pattern all year. Exports jumped early in 2025 as companies rushed to ship goods ahead of expected tariffs from Washington. But once those duties kicked in during Q2, shipments collapsed. Even with all that noise, exports so far this year are still up 0.3% compared to the same stretch in 2024.

Now look at volume: exports were down 2.8%, and import volumes dropped 0.3% in August. So even when stripping out price changes, the movement of goods clearly slowed.

Carney meets Trump as economy struggles with tariffs

The trade chaos couldn’t come at a worse time. Prime Minister Mark Carney is scheduled to meet with President Donald Trump in Washington on Tuesday to talk tariffs and trade wars. And let’s be honest, the stakes are high.

Canada’s jobless rate is 7.1%, the highest in nearly a decade, and half a percentage point higher than it was at the start of the year. The economy’s slowing down. Trump’s tariffs on cars, steel, and aluminum, three major export categories for Canada, are part of the problem. Now there’s talk of slapping new duties on softwood and lumber, which would be another body blow. Those are some of the most imported goods from Canada into the US.

“Inu Manak”, a senior fellow at the Council on Foreign Relations, said, “It makes a difference to have face-to-face time with Trump.” Carney needs to use this meeting to push hard. The public mood is sour. A recent Abacus Data poll of 1,500 Canadians showed people are more worried than ever about inflation and the economy.

“There is a necessity on the part of the (Canadian) government to shift away from so much of the focus on Trump and being anti-Trump and really think about what they can do to improve the lives of Canadians day-to-day,” said Manak.

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, added that US tariffs can still cause higher prices in Canada, because a lot of goods are built using raw materials that cross the border multiple times. That’s why Carney wants sector-by-sector exemptions, hoping to soften the blow and protect incomes.

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