By Laura Dhillon Kane
(Bloomberg) — Falling gold exports and surging imports of the safe-haven metal pushed Canada to post its second-largest trade deficit on record, surpassed only by the nadir it reached in April.
The country’s shortfall with the world widened to $6.3 billion in August from an upwardly revised $3.8 billion in July, according to Statistics Canada data released Tuesday. That was deeper than all estimates in a Bloomberg survey of economists.
Total exports fell 3% in August, the first drop in four months, with declines in eight of 11 sectors. Imports rose 0.9%. Both were driven by strong variations in gold — exports of unwrought gold fell 11.8% that month, while total imports would have fallen 1% if not this product section.
Exports to the U.S. — Canada’s biggest trading partner — fell 3.4%, again in part due to gold. U.S. tariffs continue to pummel Canadian exporters, and Canada’s goods trade surplus with the U.S. narrowed to $6.4 billion in August from $7.4 billion previously.
Prime Minister Mark Carney is set to discuss the trade war with U.S. President Donald Trump in the White House later Tuesday. Canada’s imports of U.S. goods are at their lowest level since 2022, while exports to the U.S. are stuck at 2021 levels.
“Looking through the noise, it’s clear that Canadian trade flows continued to face tariff-related headwinds in August,” Shelly Kaushik, senior economist at Bank of Montreal, said in a report to investors.
Additional tariffs announced in recent weeks on softwood lumber and pharmaceuticals point to further challenges ahead, she said. Kaushik flagged a 22% surge in pharmaceutical and medicinal exports in August — potential front-running of U.S. tariffs.
“All eyes remain on ongoing negotiations, highlighted by Carney’s visit to the White House today,” she said.
Canadian exports spiked in the first quarter as shippers rushed to get ahead of Trump’s tariffs, before tumbling in the second quarter as the levies took effect. So far this year, exports are still up 0.3% compared with the same period a year earlier.
In volume terms, exports were down 2.8% in August, while import volumes fell 0.3%.
Market reaction to the report was muted, with the loonie steady at $1.3953 per U.S. dollar and the two-year government bond yield down a basis point to 2.458% as of 9:11 a.m. in Ottawa. Traders in overnight swaps see about a 60% chance of a Bank of Canada rate cut on Oct. 29.
Despite three consecutive monthly decreases in Canada’s gold exports, following a record high in May, these shipments are more than 30% higher so far in 2025 compared with the same period in 2024, as investors flock to the metal amid political volatility.
Exports of lumber and other sawmill products plunged 25.4% in August, reaching their lowest level since May 2020. The steep drop followed the U.S. hiking duties on Canadian softwood lumber in late July and early August, but preceded the latest tariffs.
Carney has sought to diversify Canada’s trading partners as the U.S. becomes less reliable — but the August data continued to show the extent of his challenge. Exports to countries other than the U.S. fell 2%, the third consecutive monthly decline.
–With assistance from Mario Baker Ramirez, Randy Thanthong-Knight and Erik Hertzberg.
©2025 Bloomberg L.P.
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Last modified: October 7, 2025
