Canada's trade deficit widened to $2.8B in May ahead of tariffs
Purchase of aircraft, imports of gasoline help widen trade gap
Canada's trade deficit in May grew to a larger than expected $2.77 billion because of a sharp rise in imports of airliners and gasoline while exports edged down, Statistics Canada said on Friday.
That compared to a deficit of $1.86 billion in April. Canada has only recorded two monthly trade surpluses since October 2014.
TD Bank economist Rishi Sondhi called the May figures a "so-so last look at Canada's trade picture before the implementation of the steel and aluminum tariffs by the U.S. on June 1."
Imports rose by 1.7 per cent in May to $51.1 billion, including the delivery of several airliners from the U.S. valued at $937 million. At the same time, there were fewer imports of train rolling stock and parts.
There also was a 13.9 per cent rise in imports of refined petroleum products due to higher demand for gasoline at a time when a number of Canadian refineries were temporarily shut down.
Exports slipped by 0.1 per cent as shipments of motor vehicle and parts fell, in part because of disruption in the supply of auto parts from a plant in the United States.
Exports of metal ores and non-metallic minerals also fell significantly in May, down 14.6 per cent to $1.3 billion, the lowest level since September 2016, coinciding with work stoppages at two iron ore mines.
About 74.2 per cent of all Canadian goods exported in May went to the U.S.
However Sondhi predicted trade would continue to boost Canada's economy in the second half of the year, despite disruptions caused by the U.S. tariffs on steel and aluminum and retaliatory tariffs by Canada.
While stalled NAFTA talks are a complication, the low Canadian dollar means many Canadian exports remain competitive in the U.S., he said.