Read on Global NewsCanada Achieves First Trade Surplus Since Trade War Began
In a significant economic shift, Canada recorded a trade surplus in September 2025 for the first time since the onset of the U.S. trade war. According to Statistics Canada, exports rebounded by 6.3% while imports fell by 4.1%, resulting in a $153 million surplus. This marks a dramatic turnaround from deficits of $6.4 billion in August and $3.8 billion in July. The data suggests a stabilization in U.S. trade flows and a continued diversification of Canada's trading partnerships, driven by strategic government policy and shifting consumer sentiment.
In a notable economic development, Canada has returned to a trade surplus position for the first time since the U.S. trade war began, signaling a potential turning point for the nation's economy. According to data released by Statistics Canada, September 2025 saw exports rebound and imports decline, creating a slight but symbolically important surplus. This article examines the key drivers behind this shift, the sectors leading the recovery, and the broader implications for Canada's economic strategy and trade relationships.
Analyzing the September Trade Data
The September trade figures present a clear picture of recovery. Statistics Canada reported a total export increase of 6.3% compared to August, while imports fell by 4.1%. This reversal resulted in a trade surplus of $153 million, a stark contrast to the $6.4-billion deficit recorded in August and the $3.8-billion deficit in July. A trade surplus occurs when the value of exported goods and services exceeds the value of imports, analogous to a company turning a profit on its operations.
Prince Owusu, a senior economist with Export Development Canada, characterized the report positively in comments to Reuters, stating, "Overall story is really positive. It seems to suggest that the trade flow with the United States is beginning to stabilize." He also noted the continuing trend of trade diversification away from the U.S.
Key Drivers and Sector Performance
The export rebound was broad-based, with gains in nine out of eleven sectors. The most significant increases were observed in metal and non-metallic mineral products, driven largely by exports of raw gold, silver, and platinum group metals and alloys. Major destinations for these raw metals included Switzerland, the United States, and the United Kingdom.
The aircraft sector experienced an extraordinary surge, with exports jumping 72.3% in September. The United States was the primary customer for Canadian-made private jets. Statistics Canada noted that while exports in this sector typically rise at the end of a quarter, "they rose more than they typically do" in September 2025.
Despite ongoing challenges from U.S. tariffs—including a 50% duty on aluminum and steel imports—Canada's crude oil exports grew for the fifth consecutive month, rising 5.8% in September. Germany emerged as a significant buyer, contributing substantially to the sector's growth. Singapore also entered the top-three trading partner list for the month, purchasing crude oil and aircraft products.
The U.S. Trade Relationship and Diversification Efforts
The data reveals a nuanced picture of trade with the United States. Exports to the U.S. increased by 4.6% in September compared to August, led by aircraft and raw gold. Conversely, imports from the U.S. declined by 1.7%, marking the third consecutive monthly decrease. However, on a year-over-year basis, exports to the U.S. were still down 5.6%, and imports were down 8.2%.
This shift aligns with Prime Minister Mark Carney's strategy to reduce Canada's economic dependence on the United States to mitigate the impact of tariffs and trade war uncertainty. The policy focuses on finding alternative trading partners and investing in new projects while expanding resource sectors. Exports to countries other than the United States rose sharply by 11% in September, underscoring this diversification push.
Consumer Sentiment and Economic Outlook
Beyond policy, shifting consumer behavior may be influencing trade patterns. A "Buy Canadian" movement has gained traction, fueled by patriotism and a desire to avoid U.S. products. An Ipsos poll conducted for Global News found that 72% of Canadian respondents were actively avoiding U.S.-made goods, and a separate poll indicated six in ten Canadians said they could never trust the U.S. the same way again.
Economists remain cautiously optimistic. Nathan Janzen, assistant chief economist at Royal Bank of Canada, stated that while uncertainty persists regarding the future U.S. trade relationship and structural challenges like weak productivity growth remain, he is "cautiously optimistic" about the economic outlook. He added that Royal Bank of Canada does not expect the Bank of Canada will need to lower interest rates further from the current 2.25% level, which the central bank has deemed "at about the right level" to stimulate the economy while maintaining price stability.
Conclusion
Canada's return to a trade surplus in September 2025 represents a significant milestone in navigating the post-trade war economic landscape. The recovery, driven by strong performances in metals, aircraft, and energy, alongside a strategic diversification of trading partners and supportive consumer sentiment, points to a resilient economy adapting to new global realities. While challenges and uncertainties remain, particularly with the United States, this positive trade data provides a foundation for cautious optimism about Canada's economic trajectory in the year ahead.
