Posted originally on May 9, 2025 by Martin Armstrong 

Canadian exports to the United States are beginning to decrease in light of the trade war. Statistics Canada announced that exports to the United States, Canada’s largest trading partner, declined 6.6% during the first month of tariffs while imports from the United States fell 2.9%. March 2025 was the second-highest recorded monthly increase in non-US trade for Canada.

Exports to nations outside the US rose 24.8%. Overall exports in March 2025 reached $69.9 billion, a slight decrease from February’s $70.04 billion posting, yet volume rose by 1.8%. The United Kingdom has been purchasing unwrought (crude) gold exports from Canada this year, totaling C$2.01 billion in January, C$1.64 billion in February, and C$1.64 billon this March.

Canada’s crude oil sea exports doubled on an annual basis to 8 million barrels this month. The United Kingdom and the Netherlands imported 69% of all crude oil exports to Europe. Hong Kong also increased its crude imports from Canada in March.

Overall merchandise trade exports declined 0.2% for the month, with imports falling 1.5%. The trade deficit fell to C$506 million, notably less than the prior month’s C$1.4 billion deficit as Canada is seeking buyers.

Canada cannot fully rely on trade outside the US. March saw a 6.6% monthly decline in exports to the US, which is bad news for Canadian businesses. Trade with the US for March was still strong at US$140.5 billion, notably due to an increase in pharmaceuticals and medicines ahead of forthcoming industry-specific tariffs. Autos also saw an uptick ahead of industry-specific tariffs, posting a 7.7% export increase for the month. Iron and steel products, already subject to a 25% tariff, fell 9%, while aluminum alloys and unwrought aluminum rose 4.4%.

The S&P Global Manufacturing PMI for Canada reached 39.1 in April 2025. Canadian manufacturing has not seen such a contraction since early COVID months when the global economy came to a standstill. Imposed and proposed US tariffs are stifling demand as purchasers do not know what to expect.

Those adhering to US boycotts fail to realize that the Canadian economy is structurally tied to the US economy. Infrastructure was designed to support trade through railways, trucking routes, and pipelines. Europe and Asia cannot replace the accessibility or scale of the US market. Additionally, the economy is closely aligned with the USD, and a major pivot would expose Canada to currency volatility. Canada may strengthen ties with other nations to fill margins but it cannot write off its top trade partner.

C