Canada’s Export Growth and Imssiport Decline Narrow Trade Gap; USD/CAD Trades at Weekly Support

Canada’s trade deficit in March narrowed to C$506 million compared to expectations of widening to C$1.56 billion. The improvement comes on the back of a larger decline in imports, that fell 1.5 percent to C$70.40 billion. In the future, Canada’s trade balance will be shaped by economic conditions, trade policies, and commodity prices.

In March 2025, the Trump administration made a major policy change. They imposed a 25 percent tariff on aluminum and steel imported from Canada. This decision reverberated throughout the trade landscape, fundamentally altering the dynamics of commerce between the two nations. In response, Canada acted decisively by cutting its imports from the United States by 2.9 percent. This move highlights the growing tensions between these neighboring countries. Canadian businesses are currently facing challenges due to ongoing trade disputes. As a result, they are seeking alternative markets. This strategy aims to mitigate the adverse effects of tariffs. This search for new opportunities shows a strategic shift. It aims to sustain operations and ensure long-term viability in a complex global trade environment.

Resolving the trade dispute with Canada and the U.S. will not be something that can be done in the short term. The strategy is multi-faceted with emphasis on long-term structural reforms, diplomacy, and economic pragmatism. Goals that we believe will need to happen are:

• Negotiation leverage allowing Canada to reduce reliance on U.S. trade
• Addressing U.S. domestic concerns while protecting key Canadian exports will need to occur
• Co-developing EV battery plants or semiconductors across U.S.-Canada borders
• Reducing public pressure on policymakers to adopt populist protectionist measures