Canadas Trade Deficit Widens Sharply in February Amid Import Surge

Canada’s Trade Deficit Widens Sharply in February Amid Import Surge

Canada’s trade deficit was reported to have widened significantly in February 2026, reflecting a stronger-than-expected surge in imports, according to data released by Statistics Canada. The deficit was recorded at C$5.7 billion, increasing from an upwardly revised C$4.2 billion in January and exceeding market expectations of a narrower C$2.3 billion shortfall. The latest figure marked the country’s widest trade gap since August 2025, suggesting mounting pressure on external balances during the period.

The expansion in the deficit was largely attributed to a sharp rise in imports, which climbed 8.4% to a record C$72.1 billion. This increase was primarily driven by a substantial 45.6% jump in purchases of metal and non-metallic mineral products, particularly gold imports from the United States. Additional gains were observed in energy products, which rose 20.1%, alongside increases in metal ores and non-metallic minerals (17.6%) and basic and industrial chemical, plastic, and rubber products (8.2%). The broad-based rise in import categories indicated strong domestic demand as well as heightened commodity flows.

Exports also posted notable growth, rising 6.4% to C$66.3 billion, marking their highest level since March 2025. The increase was supported by higher shipments of motor vehicles and parts, which surged 24.2%, as well as gains in unwrought precious metals and alloys (14.2%) and fishing and intermediate food products (10.5%). Despite the growth in exports, it appeared insufficient to offset the faster pace of import expansion, thereby contributing to the widening trade imbalance.

Meanwhile, Canada’s trade surplus with the United States was reported to have narrowed sharply to C$1.7 billion from C$4.9 billion in January, reaching its lowest level since May 2020. This shift reflected a 13.6% surge in imports from the U.S., compared to a more modest 4.4% increase in exports. Looking ahead, analysts suggested that the trade balance could remain under pressure in the near term, with projections indicating a deficit of around C$2.1 billion by the end of the current quarter, before potentially returning to surplus territory in the longer run.