Canadian exports to the US rose sharply in August as importers appeared to rush to get ahead of new tariffs imposed by the Trump administration toward the end of the month.
Canada’s trade surplus with the US increased to C$11.2 billion ($7.9 billion) from C$6.1 billion, as exports increased by 8.1% while imports fell by 2.5%, Statistics Canada reported Tuesday. That resulted in the largest positive monthly swing ever recorded in Canada’s trade balance with the US.
Canada’s total exports rose by 2.5% while imports fell by 2%, widening the country’s trade surplus with all countries to C$4.2 billion from C$787 million in July. That marked Canada’s sixth consecutive monthly trade surplus.
Economists surveyed by Bloomberg expected a trade surplus of C$1.5 billion.
The Trump administration first threatened so-called Section 338 tariffs on July 22, which eventually came into effect a month later. The 50% tariffs applied to $20 billion of Canadian goods, and were later revised to swap out some products. Prime Minister Mark Carney responded with retaliatory tariffs , which came into effect on Sept. 8.
“The announcement of tariffs may influence trade patterns and prompt importers to increase shipments before the tariffs take effect in order to avoid additional costs,” StatCan said in its August international merchandise trade report.
The front-running of US tariffs means “the spike in exports is temporary and will ease in September,” Katherine Judge, a senior economist at the Canadian Imperial Bank of Commerce, said in a note to investors.
Energy exports increased for the first time since April, rising by 4.7%. Exports of refined petroleum products increased in August by 17.4%, driven by diesel exports to Peru, the UK, the US and the Netherlands.
Exports of consumer goods also increased in August by 6.6%. Miscellaneous goods and supplies, which rose by 43.3%, contributed considerably to that rise as exports of products targeted by tariffs,, as well as shipments of gold and silver coins to the US, increased.
Meanwhile, Canadian imports fell for the first time since January, with the largest decline posted in motor vehicles and parts, which decreased by 8.8%.
“After reaching an all-time high in July due to shorter seasonal production stoppages in the United States this year, imports of passenger cars and light trucks decreased 15.4% on a seasonally adjusted basis in August,” Tuesday’s report said.
In volume terms, total exports were up 2.5%, while total imports were down 1.1%.
TD economist Marc Ercolao said July and August trade data reflect a tailwind for growth in the third quarter, though an escalation in trade tensions likely means that momentum was short-lived.
“This sets up a likely payback in September and beyond as tariffs, Canadian countermeasures and new US import restrictions take hold, reinforcing choppy trade contributions to GDP,” Ercolao said in a note to clients.
In addition to the flurry of new tariffs that have been levied by both countries since trade talks fell apart in August, the Trump administration imposed an import ban on alcoholic beverages, whey products and motorcycles from Canada.