Canada's February trade deficit surges to a six-month high on gold imports

Canada’s merchandise trade deficit came in much wider than expected in February, data ​showed on Thursday, as a surge in gold purchases abroad pushed imports to a record high.

The percentage of ‌Canada’s exports that went to the U.S. dropped to its lowest level of just over 66%, from 68% a month ago and more than 79% a year ago when companies were front-loading goods due to looming U.S. tariffs.

The trade deficit for February was at C$5.74 billion ($4.12 billion), following an upwardly revised C$4.18 billion ​in the prior month, Statistics Canada said.

Analysts polled by Reuters had forecast a deficit of C$2.25 billion, half the actual ​number.

Total imports surged by 8.4% in February, StatsCan said, adding that it took the total value of imports ⁠to C$72.1 billion, an all-time high.

In volume terms, imports rose 7.1%, it said.

The increase was led by a massive 45.6% jump in ​imports of metal and non-metallic mineral products in February, especially purchases of gold in the U.S. by Canadian entities.

When a product exchanges hands ​from a foreign entity to a Canadian, even if it does not cross the border physically, it is considered an import on a balance-of-payments basis. When a product physically enters a country, it is factored in imports on a customs basis.

Imports of motor vehicles and parts were up 5.9% in February as ​production at Canadian auto plants came back online and sales stabilized.

Imports of energy products also increased 20.1% in February, StatsCan said.

Total exports in ​February rose 6.4%, rebounding from a decline in the previous month. Exports reached C$66.31 billion, the highest level since March 2025.

Once again, gold was one ‌of the ⁠biggest contributors to the gains with exports of unwrought gold, silver, and platinum group metals, and their alloys up 14.2%, driven by higher exports of unwrought gold to the UK.

Owing to higher gold imports from the U.S., the trade surplus with Canada’s neighbor narrowed to C$1.7 billion in February from C$4.9 billion in January, the smallest surplus since May 2020.

Exports to countries other than the United States rose 10.5% ​in February to reach an all-time ​high of C$22.3 billion, the ⁠statistics agency said, adding that this contributed to the share of exports to the U.S. falling to its lowest level ever.

“Our dependence on the U.S. is basically slowing down while our non-U.S. exports are ​picking up. So I think it’s nice to see that,” said Prince Owusu, senior economist with ​Export Development Canada.

While ⁠the diversification was primarily driven by gold exports, Owusu said Prime Minister Mark Carney’s deal with China in January helped ease some restrictions, boosting canola, soybeans and barley exports.

He added the coming months would show a bigger surge in exports to China.

Economists also said that Canada’s exports ⁠of oil ​products would grow in the coming months due to higher crude oil prices ​owing to the Iran war.

The Canadian dollar pared losses slightly after the trade data and was down 0.32% to C$1.3918 to the U.S. dollar, or 71.85 U.S. cents.

Yields on ​the two-year government bonds were up 3.8 basis points to 2.696%.