Canada’s merchandise trade deficit expanded sharply in February, reflecting a surge in imports that outpaced export growth, according to the latest data released by Statistics Canada.
The trade gap widened to $5.7 billion, significantly higher than January’s revised deficit of $4.18 billion and well above market expectations of $2.5 billion. Analysts noted that the sharp increase highlights ongoing volatility in global trade patterns and domestic demand.
Imports climbed 8.4 percent during the month, reaching a record high of approximately $72.1 billion. The rise was driven by strong demand across multiple sectors, particularly metal and non-metallic mineral products, which jumped by 45.6 percent. Other notable increases were seen in energy products (up 20.1 percent) and motor vehicles and parts (up 5.9 percent). Consumer goods, industrial chemicals, plastics, and rubber products also contributed to the surge.
Exports also posted solid growth, rising 6.4 percent to about $66.3 billion the highest level since March 2025 but failed to keep pace with the spike in imports. The increase in exports was largely supported by a rebound in motor vehicles and parts, which rose 24.2 percent after a steep decline in January. Gains were recorded across all subcategories in the automotive sector.
Additional strength came from metal and mineral exports, which grew by 11.2 percent, as well as agricultural shipments. Farm, fishing, and intermediate food products rose 10.5 percent, while exports of other crops surged 29.1 percent, driven by higher shipments of barley and soybeans to China. Canola exports also continued their upward trend, rising 21.9 percent for a fifth consecutive month, with increased demand from China, France, and Japan.
Despite these gains, Canada’s reliance on the United States as its primary export destination showed signs of easing. Exports to the U.S. accounted for roughly 67 percent of total shipments in February the lowest share on record. This shift comes as Canada intensifies efforts to diversify its export markets and reduce dependence on its largest trading partner.
Meanwhile, Canada’s trade surplus with the United States narrowed significantly to $1.7 billion, down from $4.9 billion in January. The decline was largely attributed to a spike in gold imports, which played a major role in driving overall import growth.
Analysts pointed out that gold purchases accounted for a substantial portion of the increase in imports, particularly within the metal and mineral category. This factor, combined with fluctuating global demand and evolving supply chains, has contributed to the recent swings in Canada’s trade balance.
The latest figures underscore the ongoing instability in monthly trade data, following January’s deficit of $3.6 billion. Economists suggest that while export diversification efforts may provide long-term stability, short-term fluctuations are likely to persist amid uncertain global economic conditions.
