According to Statistics Canada, in August, Canada's merchandise trade balance with the world was in a surplus position for the first time since December 2016. The $526 million surplus followed a $189 million deficit in July.
Both imports and exports declined in August. Imports fell 2.5 percent, mainly on lower imports from non-US countries, while exports were down 1.1 percent, mostly on decreased exports of passenger cars and light trucks.
Total imports declined 2.5 percent to $50.0 billion in August, with decreases in 7 of 11 product sections. Aircraft and other transportation equipment and parts, consumer goods, and motor vehicles and parts were mostly responsible for the decrease. Year over year, total imports were up 7.3 percent.
Also contributing to the overall decrease were lower imports of motor vehicles and parts, down 3.8 percent to $9.0 billion. This marks the fifth consecutive monthly decline, with imports falling 12.2 percent since the peak in March. Motor vehicle engines and parts (-9.6 percent) drove the decrease, as atypical planned shutdowns in the automotive manufacturing sector in August contributed to lower imports of auto parts.
Exports decreased 1.1 percent to $50.5 billion in August, despite gains in 6 of 11 product sections. Lower exports of motor vehicles and parts and of metal and non-metallic mineral products were partially offset by higher exports of metal ores and non-metallic minerals. Exports excluding energy products decreased 1.5 percent. Year over year, total exports were up 15.5 percent.
Following a 7.9 percent increase from May to July, exports of motor vehicles and parts fell 6.2 percent in August to $7.4 billion. Exports of passenger cars and light trucks (-8.9 percent) were mainly responsible for the decline. As with imports of engines and parts, this decrease coincided with atypical shutdowns in the automotive industry. Year over year, exports of passenger cars and light trucks were down 5.7 percent.
Exports of metal and non-metallic mineral products fell 6.2 percent to $5.4 billion in August, the third consecutive monthly decrease. Exports of unwrought precious metals and precious metal alloys (-14.3 percent) led the decrease for the section. Contributing the most to the decline were lower exports of unwrought gold to the United Kingdom. For the section as a whole, volumes fell 3.8 percent, while prices were down 2.5 percent.
These decreases were partially offset by a 20.1 percent increase in exports of metal ores and non-metallic minerals. After posting a strong decrease in July, exports of copper ores and concentrates (+$187 million) drove the increase in August, mostly on higher shipments to Japan, South Korea and India.
Imports from countries other than the United States fell 4.5 percent to $17.6 billion in August, the third consecutive monthly decline. Many countries contributed to the decrease, including China (various products), Brazil (bauxite), Belgium (pharmaceutical and medicinal products), Algeria (crude oil) and the Netherlands (motor gasoline). These declines were partially offset by higher imports from Switzerland (copper).
Exports to countries other than the United States were down 0.9 percent to $12.8 billion. Lower exports to the United Kingdom were behind the decline, principally on decreased exports of unwrought gold and crude oil. Gains in exports to India (copper ores and potash) and South Korea (copper ores) partially offset the decline.
Consequently, Canada's trade deficit with countries other than the United States narrowed from $5.5 billion in July to $4.8 billion, contributing to the movement of the overall trade balance from a deficit to a surplus in August.
Imports from the United States decreased 1.3 percent to $32.4 billion, mostly on lower imports of aircraft. Exports to the United States declined 1.2 percent to $37.7 billion, mainly on lower exports of passenger cars and light trucks. Consequently, Canada's trade surplus with the United States in August was essentially unchanged at $5.3 billion. The trade surpluses in July and August were the largest since October 2008.
August marked the third month in which tariffs were applied to exports of steel and aluminum products to the United States, and the second month in which tariffs were imposed on imports of steel, aluminum and other miscellaneous products from the United States.
On a customs seasonally adjusted basis, exports of steel products to the United States that were subject to a 25 percent tariff rose 6.3 percent in August, the second consecutive monthly increase. Despite this gain, export levels for these products were down 21.4 percent in August compared with May, when these steel products were still exempt from tariffs.
Imports of steel products from the United States subject to a 25 percent tariff fell 12.8 percent in August, on a customs seasonally adjusted basis. This follows a 38.2 percent decrease in July and a 32.4 percent increase in June. Year over year, imports of these products were down 29.0 percent in August.