Statistics Canada reported that exports fell 10.8% month-over-month—the biggest monthly drop since the early days of the pandemic. The pullback was broad-based, with declines in 10 of 11 categories, and was felt most sharply in auto exports, which dropped nearly 23%.
“April marked the first month that Canada faced the full suite of American tariffs, most notably auto tariffs, which are imposing a massive headwind on auto trade,” noted TD economist Marc Ercolao.
Imports also fell 3.5% as the new trade barriers hit both directions. Vehicle and parts imports sank 17.7%, with industrial equipment, electronics and consumer goods also declining. In volume terms, exports dropped 8.3% and imports fell 1.9%.
Exports to the U.S. plunge
The U.S. was at the centre of the downturn, with exports south of the border down 16% in April compared to a 3% rise to non-U.S. markets. While exports to other countries reached a record high, it wasn’t nearly enough to offset the losses with Canada’s largest trading partner.
As a result, Canada’s trade surplus with the U.S. narrowed to just $3.6 billion, its smallest in more than four years. Imports from the U.S. also fell sharply, down 11%, while imports from the rest of the world climbed 8%.
A firmer Canadian dollar in April, driven by broad USD weakness, amplified the drop in trade values. CIBC’s Katherine Judge estimates exports were down 8% in U.S. dollar terms and imports off just 0.9%.
Slower growth ahead, rate cuts likely
The trade hit is expected to weigh heavily on the second quarter, noted BMO senior economist Shelly Kaushik.
“These figures are in line with our expectations for trade to subtract meaningfully from economic growth in the second quarter,” she wrote.
After helping drive a strong Q1, trade is now likely to be a drag. Judge said the drop in exports, along with slowing production and a softening labour market, supports the case for the Bank of Canada to start cutting interest rates again with quarter-point rate cuts at both its July and September meetings.
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Last modified: June 5, 2025
