Canada’s merchandise trade deficit expanded to C$3.6 billion in January 2026, up from C$1.3 billion in December. Exports fell 4.7% to approximately C$62.5 billion, marking the largest decline since April 2025, while imports decreased 1.1% to C$66.1 billion.4130
Sharp Drop in Exports
Motor vehicles and parts exports plunged 21.2% to C$5.4 billion, the lowest since September 2021. Passenger cars and light trucks saw a 32.5% decrease due to prolonged seasonal production stoppages in Canada. Metal products declined 8.0%, with unwrought gold, silver, and platinum group metals down 12.6%, primarily from lower shipments to the United Kingdom. Aircraft and transportation equipment exports dropped 16.0%, affected by reduced sales to the United States.41
Energy products provided some offset, rising 4.1% led by natural gas exports, which surged 23.7% on higher prices and volumes amid extreme winter conditions in the United States. In volume terms, exports decreased 5.8%.30
Imports Moderately Lower
Imports of motor vehicles and parts fell 4.5%, including an 8.3% drop in engines and parts tied to production issues. Electronic and electrical equipment declined 3.6%, with communication and audio-video devices down 9.9% due to smartphone shortages from China and the United States amid semiconductor supply challenges. Industrial machinery rose 3.4%, boosted by equipment for LNG infrastructure in British Columbia. Volumes decreased 2.2%.41
Geographic Shifts
Trade surplus with the United States narrowed to C$5.4 billion from C$5.7 billion, as exports dropped 3.8% and imports 3.4%. The deficit with other countries widened to C$9.0 billion from C$7.0 billion, driven by a 6.5% export decline and 2.1% import increase.30
