Canada’s merchandise trade surplus narrowed sharply in July as exports fell for the first time in six months while imports continued to climb, Statistics Canada reported Thursday.

The country’s merchandise exports declined 2.3 per cent in July, while imports increased 2.2 per cent. As a result, Canada’s trade surplus with the world fell to $769 million from $4.2 billion in June, although it marked the fifth consecutive monthly surplus.

Exports fall for first time in six months

The decline in exports was broad-based, with decreases recorded in seven of 11 product sections. Metal and non-metallic mineral products and energy products posted the largest declines. Excluding those two categories, exports increased 0.6 per cent.

In real, or volume, terms, total exports declined 1.5 per cent in July.

Exports of metal and non-metallic mineral products fell 8.5 per cent following a 15.8 per cent increase in June. The decline was driven by lower exports of unwrought gold, silver and platinum group metals and their alloys, which fell 13.1 per cent.

Statistics Canada said the decrease was mainly attributable to lower purchases of Canadian-held gold by foreign residents and fewer shipments to the United States. Lower prices also contributed to the decline in export values. Since peaking in February 2026, export prices for unwrought gold, silver and platinum group metals and their alloys have fallen 9.0 per cent.

Energy product exports declined 4.4 per cent, marking a third consecutive monthly decrease. Crude oil exports fell 5.6 per cent as both prices and volumes declined, while natural gas exports dropped 14.0 per cent following two monthly increases.

The overall decline in exports was partly offset by a 34.9 per cent increase in aircraft and other transportation equipment and parts. Aircraft exports rose 80.1 per cent, with commercial aircraft and business jets shipped to various overseas destinations in July.

Farm, fishing and intermediate food product exports also increased, rising 5.5 per cent to their highest level since March 2023. Canola exports jumped 43.2 per cent in July, mainly on higher shipments to China, Pakistan and Japan. For the first seven months of 2026, canola exports were up 32.2 per cent from the same period a year earlier.

Motor vehicle imports hit record high

On the import side, total merchandise imports rose 2.2 per cent in July, marking a sixth consecutive monthly increase. Imports increased in six of the 11 product sections, while total imports were also up 2.2 per cent in real terms.

Motor vehicle and parts imports rose 11.4 per cent to a record high. It was the fifth monthly increase for the product section during the first seven months of 2026.

Statistics Canada said the usual effects of temporary North American automotive plant closures for retooling, maintenance and summer holidays were less pronounced this year, particularly in the United States. On a seasonally adjusted basis, imports of passenger cars and light trucks increased 19.8 per cent.

Imports of metal and non-metallic mineral products rose 9.3 per cent, led by a 49.7 per cent increase in basic and semi-finished non-ferrous metals and non-ferrous metal alloys. The increase reflected higher shipments of copper anodes from Chile.

Imports of unwrought gold, silver and platinum group metals and their alloys also increased, rising 14.6 per cent as a result of higher purchases of gold held in Canada by U.S. residents.

Several categories recorded declines that moderated the overall increase in imports, including energy products, down 8.2 per cent; electronic and electrical equipment and parts, down 3.3 per cent; and aircraft and other transportation equipment and parts, down 8.1 per cent.

Trade surplus with U.S. narrows

Trade with the United States also shifted significantly in July. Canadian exports to the U.S. fell 6.6 per cent, the largest percentage decline since April 2025. Lower exports of crude oil and gold were behind the decrease.

At the same time, imports from the United States increased 1.8 per cent, mainly because of higher imports of passenger cars and light trucks.

Canada's trade surplus with the U.S. consequently narrowed to $5.9 billion from $10.3 billion in June, the lowest surplus since February 2026.

Exports to other countries reach record

Exports to countries other than the United States moved in the opposite direction, rising 7.4 per cent in July to a record $25.6 billion. It was the third consecutive monthly increase.

Higher exports to the Netherlands, China and Germany contributed most to the gain. The share of Canadian exports destined for countries other than the United States reached 33.7 per cent in July.

Imports from countries other than the United States increased 2.8 per cent. Higher imports from China were partly offset by lower imports from Germany.

Canada's trade deficit with countries other than the United States narrowed to $5.1 billion from $6.1 billion in June, its lowest level since January 2021.