According to Statistics Canada, Canada's merchandise trade deficit totaled $1.9 billion in January, narrowing from a $3.1 billion deficit in December. Imports decreased 4.3 percent, mainly due to lower imports of industrial machinery, equipment and parts. Exports fell 2.1 percent, primarily on fewer exports of passenger cars and light trucks.
Following a record high in December, total imports were down 4.3 percent in January to $47.7 billion, with declines in all commodity sections. Industrial machinery, equipment and parts, consumer goods, as well as electronic and electrical equipment and parts were the main contributors to the decline in January. Year over year, imports increased 2.0 percent.
Imports of industrial machinery, equipment and parts fell 11.3 percent to $4.5 billion in January, following two consecutive months of strong increases. Imports of logging, mining and construction machinery and equipment (-40.0 percent), which reached a record high in December, were largely behind the January decline. New regulations on off-road diesel engine and machine emissions came into effect on January 1, 2018, limiting imports to machinery that meets the new standards.
After three consecutive monthly increases, total exports fell 2.1 percent in January to $45.8 billion, with declines in 7 of 11 sections. Lower exports of motor vehicles and parts, aircraft and other transportation equipment and parts, as well as forestry products and building and packaging materials were partially offset by higher exports of energy products. Year over year, exports decreased 1.5 percent. Exports excluding energy products fell 3.2 percent.
Exports of motor vehicles and parts were down 5.7 percent to $7.2 billion in January, on lower exports of passenger cars and light trucks (-13.1 percent). Atypical plant closures for this time of year were responsible for the decline in January. These temporary shutdowns also led to lower imports of motor vehicle engines and parts (-7.6 percent).
Following a record high in December, imports from countries other than the United States were down 8.5 percent to $16.8 billion in January, mostly attributable to lower imports from China (cell phones) and the Netherlands (refined petroleum products). There were also notable declines in imports from South Korea, the United Kingdom and Mexico.
Exports to countries other than the United States edged up 0.4 percent to $11.8 billion in January. Higher exports to the United Kingdom (unwrought gold) were largely offset by lower exports to Spain and China (oilseeds) as well as Turkey (coal).
As a result, Canada's merchandise trade deficit with countries other than the United States narrowed from $6.6 billion in December to $5.0 billion in January.
Exports to the United States fell 2.9 percent to $34.1 billion, mainly due to lower exports of passenger cars and light trucks, as well as aircraft. Imports from the United States were down 1.8 percent to $30.9 billion, primarily attributable to lower imports of logging, mining and construction machinery and equipment. As a result, Canada's trade surplus with the United States narrowed from $3.6 billion in December to $3.1 billion in January.