Canada’s goods trade deficit narrowed sharply in May, slipping to C$5.9 billion from April’s record C$7.6 billion, as a surge in bullion shipments more than offset weaker energy sales and another pull-back in motor-vehicle imports. www150.statcan.gc.ca
1. The scorecard at a glance
| May 2025 | Monthly change | |
|---|---|---|
| Exports | C$60.8 bn | +1.1 % |
| Imports | C$66.7 bn | -1.6 % |
| Trade balance | -C$5.9 bn | from -C$7.6 bn |
| Metal & mineral exports | +15.1 % | — |
| Unwrought gold exports | C$5.9 bn | +30.1 % |
| Energy exports | -5.6 % | — |
| Motor-vehicle imports | -5.3 % | — |
2. Gold steals the show
The headline improvement was almost single-handedly driven by a 30 % jump in exports of unwrought gold, silver and platinum-group metals, which rocketed to a record C$5.9 billion. Most of that metal travelled to the United Kingdom, underscoring London’s role as a global bullion hub. Strip out metal and non-metallic mineral products and total exports would have fallen 1.2 %, highlighting just how dominant the bullion boom was in May. www150.statcan.gc.ca
The rally in physical shipments came against a backdrop of volatile spot prices but widening investor appetite for hard-asset hedges. According to dealers, Canadian miners accelerated deliveries to lock in favourable forward curves after Washington renewed tariff threats on a range of Asian electronics, stoking inflation jitters.
3. Imports stumble for a third straight month
Total imports fell 1.6 %, their third consecutive decline. Two categories told the story:
- Metal and non-metallic mineral products sank 16.8 %, reversing April’s spike when refiners booked a one-off wave of imported gold bars.
- Motor vehicles and parts dropped 5.3 % as reciprocal levies on U.S. SUVs and light trucks began to bite, sending imports to a two-year low. www150.statcan.gc.ca
The weakness in auto inflows dovetails with softer North American demand and supply chains that are still recalibrating after last autumn’s labor stoppages.
4. Energy drags, meats and seafood counter
Exports of energy products sagged 5.6 % amid falling crude prices and lighter volumes. By contrast, consumer-oriented categories added a sliver of resilience: meat shipments to Japan leapt 13 %, and prepared seafood surged nearly 53 % after three down months. www150.statcan.gc.ca
5. The geography of trade is shifting
- United States: Exports to Canada’s largest customer declined 0.9 %, extending a four-month slide. The U.S. now absorbs 68.3 % of Canadian goods exports, well below the 76 % average seen in 2024.
- Rest of world: Sales to non-U.S. destinations rose 5.7 % to a record high, led by the UK (gold), Singapore (crude oil) and Italy (aluminium, pharma). Canada still ran a C$9.1 billion deficit with these partners, but that gap narrowed by C$1.6 billion versus April. www150.statcan.gc.ca
A widening export footprint helps diversify demand, yet it also leaves shippers more exposed to currency swings and logistics bottlenecks outside the traditional North-South corridor.
6. Market reaction: loonie shrugs off deficit
The Canadian dollar firmed to 1.3560 per U.S. dollar (73.75 U.S. cents) after the data, touching its strongest level in a fortnight. Traders largely ignored the still-sizable deficit, focusing instead on global greenback weakness and an uptick in domestic bond yields; the 10-year Canada yield climbed to 3.39 % in sympathy with U.S. Treasuries. reuters.com
Forex desks noted that while higher gold exports are CAD-positive in theory, the currency’s near-term path remains tethered to oil prices, which slipped below US$67 WTI the same day.
7. Policy implications for the Bank of Canada
Inflation watch
Gold exports are a price-driven phenomenon; they add to nominal GDP but have scant impact on real activity. Meanwhile, falling energy receipts trim royalty payments and, by extension, government revenues. The Bank of Canada will therefore focus on the underlying drag in non-commodity exports, which suggests external demand is softening under the weight of global tariffs and slower U.S. growth.
Rate-cut calculus
Markets currently pencil in two 25-basis-point cuts by year-end. A narrower trade gap reduces the urgency for monetary relief, but the composition of May’s improvement—one-off bullion flows versus broad-based export strength—won’t dissuade policymakers from easing if domestic demand falters.
8. Sector winners and laggards
| Sector | Near-term boost | Headwind |
|---|---|---|
| Gold miners & refiners | Record export volumes; favourable forward hedging | Rising input costs as scrap supply tightens |
| Logistics firms | Higher outbound volumes to Europe & Asia | Empty back-haul risk if imports keep falling |
| Energy producers | CAD strength caps imported equipment costs | Crude price softness, shrinking export values |
| Auto assemblers | Some production reshoring as imports dip | Higher component costs due to tariffs |
Investors may look to royalty streaming companies and mid-tier producers with London Metal Exchange exposure as prime beneficiaries of the bullion wave.
9. Services trade keeps the overall deficit wide
Goods tell only part of the story. When combined with services—where Canada posted an C$0.7 billion gap in May—the total trade deficit clocked in at C$6.6 billion, down from C$8.0 billion a month earlier. Services imports continued to edge higher on the back of robust outbound travel and consulting fees. www150.statcan.gc.ca
10. Chart ideas for editors
- Merchandise trade balance, Jan 2020 – May 2025: stacked bars for total, line overlays for U.S. and non-U.S. balances.
- Unwrought gold exports vs. total exports: dual-axis line chart highlighting May’s record spike.
- Exports by destination share: pie or column chart showing the U.S. share sliding below 70 %.
- CAD/USD vs. Brent crude: correlation lens for currency watchers.
All datasets are available via Statistics Canada’s Table 12-10-0011-01 and FRED’s daily FX series.
11. What to watch next
| Date | Release | Market angle |
|---|---|---|
| Jul 31 | Bank of Canada rate decision | Guidance on tariff impacts and export elasticity |
| Aug 5 | June merchandise trade | Confirmation of whether gold strength endures |
| Aug 8 | July Labour Force Survey | Domestic demand signal; wage imports inflation |
| Q3 | Federal fiscal update | Room for export-led revenue windfalls |
A sustained bulge in bullion shipments could flip the goods balance back to surplus later this summer, but only if energy prices stabilise and auto flows rebound. Investors should also monitor whether the UK’s vault capacity continues to attract Canadian bars; any bottleneck there could see volumes normalise quickly.
Bottom line
May’s headline improvement is good news, yet it masks a mixed underlying trend. Gold saved the month, but energy, autos and U.S. demand remain soft. For policymakers, the report offers reassurance that the external sector can still deliver upside surprises—just not necessarily the kind one can bank on every month. For markets, the numbers reinforce a familiar theme: the loonie’s fate hinges as much on global risk sentiment and commodity prices as on any one data print.
Expect more volatility ahead—both in the trade ledger and on dealers’ screens—until the tariff dust settles and export gains broaden beyond bullion.