Canada: Trade deficit surge and 2026 outlook – RBC

Royal Bank of Canada (RBC) analysts note Canada’s trade deficit widened sharply in February to CAD 5.7 billion, far above expectations, as both exports and imports jumped. They highlight one-off Gold imports, stronger equipment and consumer goods demand, and surging motor vehicle exports. RBC expects March’s nominal deficit to narrow and sees 2026 trade as a smaller drag on Canadian growth.

Deficit spike, Gold imports and 2026 trade

"Canada's international trade data is notoriously volatile, and February's report was no exception with an unexpected surge in the Canadian trade deficit to a $5.7 billion deficit -- larger than market expectations for $2.5 billion shortfall."

"Both exports and imports jumped sharply higher, with about a third of the latter coming from a surge in imports of gold products but also stronger equipment and consumer goods imports."

"That leaves net trade tracking a sizable subtraction from Q1 GDP growth, but also offsetting strength in business and consumer spending by domestic buyers."

"And exports of motor vehicles surged higher, adding to evidence that a run of production disruptions that weighed on manufacturing output in late 2025 and early in 2026 is easing."

"And the nominal trade deficit will likely shrink in March with the surge in gold imports in February not likely to be repeated."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)