OTTAWA (Reuters) – Canada’s trade surplus in January exceeded expectations by a wide margin to post a 32-month record as fears of tariff from the U.S. pushed exports of cars and energy products, especially south of its border, data showed on Thursday.
Canada posted a trade surplus of C$3.97 billion ($2.76 billion), more than double the upwardly revised C$1.69 billion seen in December, Statistics Canada said. This was a second consecutive month when exports far exceeded imports although booth grew by a healthy margin.
U.S. President Donald Trump has slapped a 25% tariff on almost all Canadian exports to the country and after a retaliation by Prime Minister Trudeau, he has threatened to stack up more tariffs on them.
On Wednesday, Trump agreed to exempt automakers from the tariffs for one month as long as they comply with the terms of the Canada-U.S.- Mexico free trade agreement, and agreed to look at other products too for a similar relief.
Analysts polled by Reuters had forecast Canada’s trade surplus to be at C$1.28 billion and have said that trade balances would benefit from companies front-loading orders in January.
The tariff threats are “an incentive for importers to increase their shipments prior to implementation to avoid additional costs,” Statscan said, adding that this trend led to a jump in exports and imports.
Total exports increased 5.5% in January to a record of C$74.5 billion, following a 6% increase in December. A 1% decline in the value of Canadian dollar to its U.S. counterpart in January also led to increase in exports value, it said.
In volumes terms, total exports rose 4.5% in January, following an increase of 2.6% in December.
The jump in exports was led by an over 12% jump in motor vehicles and parts, followed by a 4.8% increase in exports of energy products, data showed.
Canada’s trade surplus with the U.S. clocked a record of C$14.4 billion in January, from C$12.3 billion in December. This was led by a historical high exports of C$58.2 billion to the U.S. Imports from the United States increased 4.7%, Statscan said.
Trump has often indicated that he is unhappy that his country imports more from Canada than it exports and analysts and economist have said that part of the reason for Trump imposing tariffs is driven the need to reduce the deficit.
Exports to countries other than the United States fell 1.0% in January. Lower exports to some countries was largely offset by a significant increase in exports to China.
(Reporting by Promit Mukherjee; Editing by Dale Smith)
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