Canada Faces Trade Deficit as U.S. Trade Gap Narrows Ahead of New Tariffs

Canada's exports fell sharply in February, reversing its January surplus, while the U.S. saw record exports and prepares for sweeping tariff measures in April.

• Canada posted a $1.52 billion trade deficit in February 2025, a sharp reversal from its $3.13 billion surplus in January, driven by falling energy and automotive exports.
• Canadian exports dropped 5.5% to $70.11 billion, with energy products down 6.3% and motor vehicles and parts declining 8.8%.
• The U.S. trade deficit narrowed by 6.1% in February to $122.7 billion, supported by record-high exports of $278.5 billion, particularly in industrial supplies and autos.
• Businesses in both nations have been stockpiling inventories to mitigate the anticipated impact of President Trump's 10% baseline tariff on all U.S. imports, set to take effect in April 2025.
• Economic analysts predict slower growth for both economies in early 2025, with Canada's trade imbalance raising concerns and U.S. GDP growth estimates falling below 0.5% for Q1.

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