Canada’s trade surplus in May reached a four-year high, marking the fourth consecutive month of expansion. Data released on Tuesday revealed that exports to the United States surged to their highest level since February last year, contributing to a trade surplus of $4.24 billion for Canada in May, up by 0.9% compared to the previous month’s revised figure of $3.41 billion as reported by Statistics Canada.
This robust performance, representing the third consecutive month of trade surplus for Canada, was primarily driven by a 1.5% increase in exports to the U.S., Canada’s largest trading partner. Analysts, previously estimating a trade surplus of $2.85 billion, were surprised by the higher-than-expected surplus.
Despite challenges posed by U.S. President Donald Trump’s tariffs on critical sectors in Canada, businesses have been exploring diversification away from the U.S. market. However, trade experts caution that unwinding decades-old supply chains from the U.S. may take time, given that the country historically accounted for nearly three-quarters of Canada’s total exports.
Notably, exports to the U.S. rose by 1.5% to $53.72 billion, marking the fourth consecutive monthly increase, while imports from the U.S. saw a slight decline of 1.4%. As a result, Canada’s trade surplus with the United States widened to $11.6 billion in May, the highest level since January 2025, potentially influenced by increased energy export prices.
Conversely, exports to countries other than the U.S. continued to decrease in May, albeit at a slower pace compared to April, while imports from non-U.S. countries rose, leading to a widened trade deficit of $7.4 billion for Canada.
The surge in exports was mainly attributed to increased shipments of metal ores and non-metallic minerals, particularly sulfur exports. This rise was partly due to disruptions in the supply chain caused by conflicts in the Middle East, impacting shipments passing through the Strait of Hormuz. However, with the easing of tensions and ceasefire agreements, these shipments have gradually resumed.
Additionally, consumer goods, industrial chemicals, and farm and fishing food products also experienced notable export growth in May. Despite these positive trends, crude oil and gold exports, which had previously bolstered Canada’s trade surplus, declined during the month.
While energy exports dropped by 2% due to decreased crude oil volumes, total imports decreased by 0.2%, with a significant 18.2% drop in metal and non-metallic categories imports in May. Economists, including senior economist Robert Kavcic from BMO, indicate that although energy exports are declining, they continue to contribute positively to Canada’s trade figures. Kavcic suggests that while trade surpluses can fluctuate rapidly due to oil price swings, the current high point signifies a positive outlook for Canada’s economic growth in the second quarter.
In summary, Canada’s trade surplus expansion in May, driven by increased exports to the U.S. and diversified export growth in various sectors, reflects a promising economic trajectory for the country despite ongoing challenges in the global market landscape.