Royal Bank of Canada (RBC) economist Nathan Janzen notes that higher Oil and Gold exports pushed Canada’s trade balance back into surplus in March, even as non-energy exports remain under pressure from U.S. tariffs. He highlights weak volumes in tariffed steel and lumber, but improving motor vehicle exports and strong equipment imports that signal firmer domestic demand and business investment.

Energy-led surplus offsets tariff headwinds

"The surge in oil prices and another jump in gold exports were the main factors pushing Canada's trade balance back into surplus in March."

"Beyond those products, the data was mixed but broadly consistent with an external demand backdrop still under pressure from U.S. tariffs, but also still showing signs of stabilization."

"Excluding price impacts exports still declined by an annualized 2.4% in Q1 as a whole -- exports of (heavily tariffed) steel and lumber products were still running 50% and 22%, respectively, below year ago levels."

"A surge in Q1 imports leaves net trade tracking a large 4 ppts from Q1 GDP growth, but also is consistent with offset from relatively resilient domestic demand, including a 17% (annualized rate) increase in industrial equipment and imports -- a positive sign for Canadian business investment."

"Significant trade uncertainty remains with negotiations on CUSMA renewal likely to intensify in coming months, but we continue to expect, as a base-case, that a more stable U.S. tariff backdrop in 2026 (albeit still at significantly higher tariff rates for some products) will leave trade as less of a headwind to growth than it was in 2025."

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