Canada’s merchandise trade deficit widened in June to C$5.9 billion ($4.24 billion) as imports grew faster than exports due to a one-time high-value oil equipment import, data showed on Tuesday.
The deficit observed in June is the second highest on record after the deficit dipped to its largest in history n April to C$7.6 billion.
Analysts polled by Reuters had predicted the trade deficit to widen to C$6.3 billion in June from a downwardly revised C$5.5 billion in May.
Total imports were up 1.4% in June to C$67.6 billion from a drop of 1.6% in the prior month, Statistics Canada said, adding that excluding the one-time product import which was from the U.S. for an offshore oil project, total imports were down 1.9% in June.
Canada’s total exports grew 0.9% in June to C$61.74 billion following an increase of 2% in May, its second consecutive increase, Statscan said, led primarily by an increase in value of crude oil exports which saw an increase in prices in June due to tensions in the Middle East.
In volume terms, however, exports were down 0.4% in June.
The U.S. President Donald Trump cranked up the tariffs on Canada to 35% from this month from 25% on goods which were non-compliant with a free trade deal. Canada is also struggling with a slew of sectoral tariffs on steel, aluminum and automobiles.
This has chewed into its massive trade balance with the U.S. as exporters drove away from what the world’s biggest market in Canada’s backyard to other regions from Europe and Middle East to as far as the Indo-Pacific.
Exports to the U.S. in June, however, increased by 3.1% in June, due to crude oil shipments. But on a year-over-year basis, exports to the U.S. were still 12.5% lower when compared with the same period a year ago.
After reaching a record high in May, exports to countries other than the United States were down 4.1% in June, representing the first decline since February, Statscan said.
The increase in total imports in June was mainly led by a 2.6% increase in imports from the U.S. due to the import of a module for an offshore oil project, the statistics agency said.
This was the first increase in imports after three consecutive monthly decreases, data showed.
The Canadian dollar slightly weakened further after the data and was trading down 0.2% to 1.3804 against the U.S. dollar, or 72.44 U.S. cents. Yields on the two-year government bonds were up 0.6 basis points to 2.703%.
(Reporting by Promit Mukherjee; Editing by Dale Smith and Nick Zieminski)