Is Canada finally breaking free from US trade dominance Amid a brewing trade war?
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Ottawa, May 06, 2025 -Canada traded significantly less with the United States in March but made up for it at the start of a trade war between neighbors with increased overseas shipments, official data showed Tuesday.The fresh trade figures come as Prime Minister Mark Carney was to meet with President Donald Trump in Washington to discuss strained trade and security ties.The United States imposed broad tariffs on imports of Canadian goods at the beginning of March before announcing several reductions and exemptions, while Canada hit back with counter measures.As a result, Statistics Canada said, exports to the United States "were down significantly for the month," about 6.6 percent."But this decrease was almost entirely offset by a strong increase in exports to countries other than the United States," the national statistical agency said, pointing to a 24.8-percent surge in shipments overseas.The jump in exports to those other countries fueled the second-largest percentage increase on record, it added.Imports from the United States, meanwhile, fell 2.9 percent amid souring public sentiment toward Canada's historical ally and largest trading partner.Carney last week won reelection on a pledge to stand up to the US president's tariffs and threats to annex Canada.He said Friday "our old relationship (with the US) based on steadily increasing integration is over" and vowed to diversify trade ties.According to Statistics Canada, total exports in March fell 0.2 percent mainly on lower prices, while total imports were down 1.5 percent.As a result, Canada's trade deficit went from Can$1.4 billion (US$1.0 billion) in February to Can$506 million (US$367 million) in March.Canada's trade surplus with the United States, meanwhile, narrowed to Can$8.4 billion (US$6.1 billion).The month saw higher exports of gold to the United Kingdom, crude oil to the Netherlands and various products to Germany.Exports of motor vehicles and parts also surged ahead of US tariffs on the auto sector implemented in April.There were, however, fewer shipments of pharmaceuticals and uranium to the United States, and pork to Asian countries.Natural gas exports also decreased.Trade in steel and aluminum was mixed in the face of 25 percent US tariffs and Canadian counter levies.Exports of steel products fell, but exports of aluminum products rose for a fourth consecutive month. Imports of steel products were also down while imports of aluminum products increased.Analysts expect the full impacts of the tariffs are still to be felt.Canada should "brace for increasing headwinds to trade as the worst of the trade conflict is expected to take place over the coming quarters," TD Economics analyst Marc Ercolao said in a research note.
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